The objective is to approve the permanent immobilization of the assets of the Central Bank of Russia even before the decisive summit on December 18. A meeting in which European leaders have committed to approving a huge financial aid package to keep Ukraine afloat in the next two years and allow it to resist Kremlin aggression.
The permanent freezing of Russian funds would be the first step to be able to later send the money to Volodymyr Zelensky’s government in the form of a ‘reparations loan’which kyiv would only have to return if Moscow compensates it for the destruction of the war.
The Orbán Government, Vladimir Putin’s greatest ally within the EU and also aligned with Donald Trump’s thesesopposes Europe maintaining its financial and military support for Ukraine.
For its part, Belgium has so far vetoed the ‘reparations loan’ because it fears becoming the favorite target of the Kremlin’s retaliation, since most of the Russian funds are in the financial services company Euroclear, based in Brussels.
Initially, the Commission Ursula von der Leyen had proposed approving both steps at the same time at the December 18 summit: the perpetual immobilization of Russian assets and the reparations loan. But EU governments have decided to separate the two stages to isolate Hungary and thus increase pressure on Belgium.
Brussels’ decision to accelerate, which has been advanced by the newspaper Financial Timesis also due to the North American Government’s intention to appropriate Russian funds frozen in Europe.
In his 28-point peace plan, Trump proposes investing these assets in Washington-led efforts to rebuild Ukraine. The US would receive 50% of the benefits of this operation.
The EU agreed to freeze the 210 billion assets of the Central Bank of Russia in community territory on February 28, 2022, as part of the third package of sanctions against the Kremlin for the war in Ukraine.
These sanctions are renewed every six months and to maintain them requires the unanimous support of all 27 Member States. Hungary has already threatened several times to veto the renewal, although it has never done so. However, the release of Russian assets would immediately put the entire reparations loan framework in check.
That is why the Community Executive has proposed a regulation to indefinitely prohibit any transfer to Moscow of the immobilized assets of the Central Bank of Russia.
The legal basis invoked by Brussels is Article 122 of the Treaty, an emergency clause that allows financial assistance to be provided to Member States in exceptional situations of economic difficulties, and whose activation only requires a qualified majority and not unanimity, thus circumventing Hungary’s veto.
“It is urgent to prevent funds from being transferred to Russia to limit the damage to the Union’s economy,” the legislative proposal maintains.
“In the absence of a ban on transferring the assets and reserves of the Central Bank of Russia, these resources will be used to support Russia’s war effort against Ukraine and its hybrid activities in the EU, thus aggravating economic difficulties within the Union“says the regulation.
This is the regulation that the EU governments plan to approve in the coming days (there is still no defined date) bypassing the Budapest veto. “The negotiations are progressing, but I cannot go into details,” a second European diplomat explains to this newspaper.
As for Belgium, the president of the Commission, Ursula von der Leyenassures that his proposal already takes into account “most” of the concerns raised by his prime minister, Bart de Wever, who, however, still maintains his veto.
De Wever, who met last Friday with Von der Leyen and Chancellor Friedrich Merz, demands a joint guarantee from the rest of the member states to cover all of the frozen Russian funds and distribute all the associated risks.
“Belgium continues to be a country that wants to reach a solution at the European level, and a good solution. I don’t think this is the right solution. If a large number of countries want this reparations loan, I made it clear to Mrs Von der Leyen and Mr Merz on Friday that there were three crucial conditions,” De Wever said this Wednesday in the Belgian Parliament.
“If these three conditions can be guaranteed before December 18, it is possible that we will give our approval. It is not in Belgium’s DNA to act like Hungary in Europe. But I remain skeptical,” warns the Belgian Prime Minister, who also opposes using article 122.
“It is the money of a country with which we are not at war (…) It would be like entering an embassy, taking out all the furniture and selling it,” De Wever stated.
The negotiations continue and the president of the European Council, the Portuguese António Costa, has already warned that next week’s summit could be extended indefinitely until there is white smoke.
“I am sure that on December 18 we will make a decision. But, as I have told my colleagues, if necessary, we will continue on December 19 or 20, until we reach a positive conclusion,” Costa said.