On Friday 12 December, the Member States of the European Union are expected to decide by a qualified majority whether to adopt the proposed regulation banning the transfer outside the EU of Russian assets immobilised in a financial institution (central securities depository, bank).
Based on a provision of the TFEU (Article 122) that allows a Member State to be assisted in the event of an “exceptional situation, which depends on external factors which are beyond (its) control” this legislative text will minimise the risk represented by the obligation to renew European sanctions against the Bank of Russia every six months by unanimous vote of the Member States. Hungary is openly refusing to commit to any further support for Ukraine.
Discussions on this issue took place on Thursday 11 December at the level of the Member States’ ambassadors to the EU (Coreper). The Danish Presidency of the Council of the EU confirmed that it had launched a written procedure with a view to ratifying a revised version of the proposed regulation the following day.
The proposal for a regulation prohibiting the transfer of immobilised Russian assets outside the EU was submitted by the European Commission at the beginning of December, as part of the two financing options envisaged to finance Ukraine in 2026 and 2027, namely the Reparations Loan aimed at optimising the use of all Russian assets immobilised in the EU, but without confiscating them, and a loan secured against the Multiannual Financial Framework (see EUROPE 13765/1).
The aim is to give the immobilisation of Russian public assets “a more lasting character”, regardless of the methods that the European Council chooses for continuing to finance Ukraine, said a European source on Thursday 11 December. The source stressed that the aim was to put into practice the European Council’s decision, reiterated in October, to maintain the freezing of Russian public assets “until Russia pays war reparations” to Ukraine. Nevertheless, the source admitted that the prolonged immobilisation of Russian assets was “a precondition” for theReparations Loan to be set up.
Anticipating the ban on transferring frozen public assets out of the EU will also send a signal to the United States, which is eyeing this financial windfall for investment in Ukraine and Russia as part of a peace agreement between the two warring countries. It is up to Europeans alone to decide how these assets will be used.
Discussions on the financing of Ukraine, in particular the guarantees to be provided by the EU and/or the Member States, were due to continue on Thursday evening at a dinner of European finance ministers convened by the Danish Presidency.
To see the proposal banning the transfer of Bank of Russia assets from the EU to Russia: https://aeur.eu/f/jtr
Hungary denounces circumvention of unanimity. In a statement, Hungary said it was “deeply concerned” by the recent tendency of circumventing unanimous decision-making procedures in the field of common foreign and security policy. It even accused the European Commission, by “tendentiously” contributing to this approach, of setting aside its role as guardian of the Treaties to advance its “political agenda”.
Citing European case law, it rejected recourse to Article 122, taking the view that the freezing of Russian assets constitutes a sanction in its own right. And to point out that any measure adopted on the basis of Article 122 must be temporary, which is not the case with the current proposal.
To see Hungary’s statement: https://aeur.eu/f/jy5
Belgium reiterates its concerns. Belgium, which hosts the central securities depository where €185 billion of Russian assets are immobilised (out of a total of €210 billion), continues to call for solid guarantees from the EU and its Member States so that it is not left to face Russia alone if it takes legal action in the event of the Reparations Loan materialising.
Unsuccessful candidate for the presidency of the Eurogroup (see other news), Belgian minister Vincent Van Peteghem recalled his country’s “unwavering support” for Ukraine. “Russia has to pay for the war and Russian frozen assets have to be used for that”, he stressed. He assured the Belgian government was looking for “constructive solutions”, while reiterating Belgium’s “concerns” about the “legal and financial risks” inherent in the Reparations Loan. These concerns relate to “guarantees, the liquidation mechanism and (financial) burden sharing”, he added.
The Belgian authorities have tabled a number of amendments to the legislative package. While several diplomats have welcomed this concrete step, some are wondering what Belgium’s final objective is, between participating in the rigorous work of drafting legislation or ultimately obstructing the process. (Original version in French by Mathieu Bion)