According to commentators, the Prime Minister of Belgium, Bart De Wever, is the big winner of the European summit of 18 and 19 December, which resulted in an agreement by the EU27 on a €90 billion loan to Ukraine from the European Union budget (see EUROPE 13776/1).
Having achieved the feat of achieving unanimity in his country, the Flemish nationalist spent two months standing up to his German, Nordic and Baltic counterparts, all of whom were keen to make Russia pay for the destruction caused in Ukraine. And he managed to win over other leaders, such as Italy’s Giorgia Meloni and France’s Emmanuel Macron, both reluctant at the idea of using all of the Bank of Russia’s assets immobilised in the EU. Regularly warning of the political, legal and economic risks associated with the Reparations Loan, to which Belgium would have been - by far - the most exposed Member State, Mr De Wever set such high conditions, such as the granting of unlimited guarantees by all the participating countries, that the realisation of this financial operation had become mission impossible.
Representing a new nationalist axis in the European Council, Hungary’s Viktor Orbán, Slovakia’s Robert Fico and the Czech Republic’s Andrej Babiš also won a convincing victory. Reputedly close to Moscow, they prevented Russian public assets from being used to finance reconstruction and the war effort in Ukraine. They accepted that the EU budget will be used to continue funding Ukraine, while ensuring that their country bears no budgetary obligations.
On the other hand, the German Chancellor, Friedrich Merz, and the President of the Commission, Ursula von der Leyen suffered a setback. The two leaders were personally involved in supporting the Reparations Loan, even going so far as to organise a one-to-one dinner with Mr De Wever in Brussels to try to convince him. But they were slow to grasp the extent of Belgian apprehensions and to reassure the country about the EU’s ability to mitigate any negative consequences of the initiative, which was ultimately abandoned.
To save face, Germany secured a clause allowing the EU to ‘reserve the right’ to use Russian public assets to repay the future loan backed by the EU budget. Until further notice, these assets can no longer be transferred to Russia, a measure contested by Hungary and Slovakia.
Of all the comments read, few mention the role played by the President of the European Council, António Costa. At the previous summit at the end of October, he announced the EU’s commitment to deciding, before the end of 2025, the terms and conditions of funding for Ukraine for the next two years (see EUROPE 13737/1). Mission accomplished. Finding a solution sends a message to the outside world that the EU is true to its word and intends to play a role, at least financially, in the search for lasting peace in Ukraine. Because, as one of the negotiators repeated before the European summit, the Americans don’t care where the money comes from. This is an internal issue for Europeans.
It is reasonable to assume that Mr Costa and his team played the Reparations Loan card advocated by a large majority of Member States and the Commission. For a fortnight, diplomats and experts devoted their days and sacrificed their nights in an attempt to bring this financial operation to a successful conclusion. Up until the eve of the summit, the Danish Presidency of the Council of the EU was insisting that the option of a loan backed by the EU budget was impossible: Hungary would veto any decision requiring unanimity among the Member States.
However, on the eve of the summit, there were already discordant signals undermining the Reparations Loan option. Viktor Orbán himself claimed victory when he announced that this formula had already been buried. On Thursday morning, when they should have begun their work on funding for Ukraine, the EU27 reviewed the other subjects on the agenda and did not open this file until the evening. Throughout the day, the Belgian authorities and the Commission tried to find a common language. But when the option of a loan using Russian public assets was tested on the basis of the conditions agreed by Mr De Wever, several dissenting voices were raised.
Until Mr Costa stepped in. As a lawyer, he quickly understood the difficulty of quantifying the financial risks inherent in the Reparations Loan, whereas those associated with a loan backed by the EU budget are well defined and relatively well controlled. In the early hours of Friday 19 December, he turned to Mr Orbán and asked him if he would agree to the Member States deciding unanimously to mobilise the Multiannual Financial Framework. Aware of the determination of the other leaders to find a solution, the latter acquiesced, setting out his conditions.
Was such a scenario premeditated? This hypothesis cannot be ruled out.
In July 2015, to prevent Greece from defaulting on its debt, the countries outside the euro area agreed to allow the Commission to use the EU budget to raise funds via the European Financial Stabilisation Mechanism (EFSM) (see EUROPE 11361/1). This is exactly what the Member States are going to put in place for Ukraine, this time for a candidate country and, admittedly, on a much larger scale.
But why didn’t the Commission anticipate this possibility, when it has already been tried and tested? Some point to the hubris of devising a clever financial package based on the moral assertion that Russia must pay.
The countries close to Russia wanted to make it pay by using Russian public assets, but politics is not an emotional business, concluded Mr De Wever, satisfied that reason had prevailed in the early hours of Friday 19 December.
Mathieu Bion