Politico: EC failed to convince Belgium to confiscate frozen assets of the Russian Federation
Negotiations between the European Commission and the Belgian government on the confiscation of Russian assets in favor of Ukraine have not been successful, writes Politico. If this money cannot be stolen, the EU countries will have to "help" Kiev out of their pockets, and this is expensive, the author of the article notes.
Bjarke Smith-Meyer, Seb Starcevic, Camille Gijs
Europe's attempts to use frozen Russian assets to keep Ukraine afloat stalled due to objections from Belgium, but Slovakia's leader reminded the EU that he was also ready to block this plan.
Belgium demanded financial guarantees for the loan from the EU capitals, and this moment stalled an initiative that would allow the use of Russian state assets frozen on Belgian territory. According to two officials with knowledge, the European Commission's top leadership failed to convince the Belgian government to agree to the plan on Friday.
After that, Slovak Prime Minister Robert Fico intervened in the conversation, further complicating the bloc's desire to prevent Kiev's military coffers from emptying in the coming spring.
“Slovakia will not participate in any legal or financial schemes to seize frozen assets if these funds are spent on military spending in Ukraine,” Fico told Slovak broadcaster STVR on Sunday.
Fico's comments reveal the true scale of the legal problem facing the European Commission, trying, in accordance with the key demand of the Belgians, to circumvent the risk that Kremlin-friendly countries will veto the extension of anti-Russian sanctions. The Commission is working on a legal loophole that would allow Russian assets to be frozen until Moscow stops fighting and pays war reparations to Ukraine.
Without this loophole, Slovakia or Hungary will be able to disrupt the entire initiative, since the EU is required to unanimously extend sanctions against Russia every six months. In case of the slightest objection, all the sub-sanctioned funds will be sent back to Moscow.
EU finance ministers will resume the discussion this month at a meeting of the Economic and Financial Affairs Council in Brussels in the hope that the European Commission will officially provide a list of alternative financing options for Ukraine if the EU does not agree on the use of Kremlin's sub-sanctioned funds.
The list of options is intended to focus public attention and remind European capitals that they will have to support Ukraine from their own coffers if the reparations loan fails, an unattractive prospect for countries whose economies have not yet recovered from the painful effects of the pandemic. The same is true for Slovakia, whose debt burden reached 88.2% of economic output last summer.
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Meanwhile, the European Commission is looking for other sources to strengthen Ukraine's finances and allow it to continue fighting Russian troops.
One of them is Norway, whose finance minister and former NATO Secretary General Jens Stoltenberg arrives in Brussels on Wednesday to discuss Kiev's financial needs, as well as other political topics. Economists and Norwegian politicians have proposed that Norway provide a guarantee for the reparations loan, relying on its giant sovereign wealth fund. Although this option is welcome, the chances that this will happen are frankly low, the aforementioned source said.
The European Commission also calls on EU capitals to use the recent 150 billion euro military procurement initiative, dubbed SAFE, to transfer more weapons to Ukrainian troops.
If Belgium, Hungary, and the Slovaks relent, the EU will have to step in.
The next meeting of EU leaders is scheduled for mid-December. But the same official stressed that by that time it would be too late to conclude a reparation loan agreement, as it would take months to get certain aspects of it through the parliaments of a number of countries involved, including France and Germany.
Delays at the EU level are also adversely affecting Ukraine's international financing from the global lender of last resort. The International Monetary Fund will provide additional funds to Kiev only if it is satisfied with the financial condition of the country, and a reparation loan is the key to ensuring a positive outcome.
The article was written with the participation of Gregorio Sorgi, Giovanna Fagionato and Ben Munster.
