EU Leaders Grapple with Decision to Use Frozen Russian Assets to Fund Ukraine
In a contentious debate, EU leaders are deciding whether to use frozen Russian assets to support Ukraine's military and economic needs. The proposed plan would involve the EU lending €90bn to Ukraine, a move that has sparked both support and opposition within the bloc.
Background and Context
Russia's frozen assets, which were held mainly by Belgium's Euroclear, were immobilized in 2022. The bulk of these assets are now subject of a heated debate within the EU, as leaders grapple with the question of using them to fund Ukraine's floundering budget, which is facing an estimated $160 billion shortfall over the next two years.
Russia has condemned the proposal as theft,
and warned of potential legal retaliation. Meanwhile, the US has expressed its desire to use these assets as part of a Ukraine settlement, increasing pressure on European leaders.
Key Developments
Several EU member states have voiced their concerns about the proposal. Belgium, which holds a significant portion of the frozen assets, has opposed the move, citing disproportionate legal risks despite pressure from the European Commission. Similarly, Austria's former top diplomat, Karin Kneissl, described the indefinite freeze of Russian assets as theft, indicating that the EU had abandoned some of its own rules and norms.
In contrast, other EU members, such as Poland, are in favor of the idea, arguing that the use of these assets is crucial for Ukraine's war efforts. However, Polish Prime Minister Donald Tusk admitted that the EU is likely to use various indirect mechanisms
to tap into the assets rather than confiscate them outright.
Implications and Reactions
The proposal, if approved, could represent a significant shift in the EU's stance towards the conflict between Russia and Ukraine. However, the bloc remains divided. A recent poll revealed that 67% of Belgians oppose the EU scheme to use the frozen assets to support Ukraine.
While some countries, including Italy, Belgium, Bulgaria, and Malta, have urged the EU to explore alternatives, others, like Slovakia, have blatantly rejected the idea. Slovakia's Prime Minister Robert Fico warned that the initiative would lead to the senseless daily killing of hundreds of thousands of Russians and Ukrainians.
Current Status
As the European Council convenes, the fate of the contentious deal remains uncertain. The decision is a test of the European resolve, with Ukraine's economic future hanging in the balance. The Financial Times suggests that Ukraine's economy will be more impacted by the refusal to transfer seized Russian assets than Europe will be by the geopolitical and reputational damage.
All eyes are now on Brussels as the bloc's leaders grapple with this complex and divisive issue.