EU set to indefinitely freeze Russian assets, removing obstacle to Ukraine loan
At least 15 of the 27 member states have to agree on plan to immobilise 210 billion euros worth of assets
[BRUSSELS] The European Union (EU) looks set on Friday (Dec 12) to indefinitely freeze Russian central bank assets held in Europe, removing a big obstacle to using the cash to help Ukraine defend itself against Moscow’s invasion.
EU governments aim to sign off by 4 pm GMT, through a qualified majority vote, on a plan to immobilise 210 billion euros (S$318 billion) worth of Russian sovereign assets for as long as needed, to prevent major economic disruption to the EU economy.
A qualified majority among the governments means the support of at least 15 of the 27 member states, representing 65 per cent of the population.
The new freeze, which would stay in place “until there is no longer an immediate threat to the economic interests of the Union”, will replace the current system, which requires a roll-over of the freeze every six months by unanimity.
This will remove the risk that Hungary and Slovakia, which have better relations with Moscow than other member states, could refuse to roll over the freeze at some point, forcing the EU to return the money to Russia.
Planned loan to Ukraine
The indefinite asset freeze is meant to help convince Belgium to support the EU’s plan to use the frozen Russian cash to extend a loan of up to 165 billion euros to Ukraine, to cover its military and civilian budget needs in 2026 and 2027.
The loan will be paid back by Ukraine only when Russia pays Kyiv war damages, making the loan effectively a grant that advances future Russian reparations payments.
Germany sees no alternative to the reparations loan, with an agreement yet to be finalised and a decision expected at an EU summit next week, European diplomatic sources said.
EU leaders – the European Council – are to meet on Dec 18 to finalise the details of the reparations loan and resolve the remaining problems, including guarantees from all EU governments that Belgium would not be left alone to foot the bill, should a potential Moscow lawsuit prove successful.
Germany would provide 50 billion euros in guarantees out of a total of 210 billion euros, the sources said.
If no agreement is found at the EU summit, it would “send a disastrous signal to Ukraine”, one of the sources revealed, adding that this would be a failure of Europe as well.
Danish Finance Minister Stephanie Lose, whose country holds the rotating EU presidency, told reporters that “some worries” still needed to be addressed but “hopefully we will be able to pave the way towards a decision at the European Council next week”.
Russian central bank says it is suing Euroclear
Hungarian Prime Minister Viktor Orban said in a post on Facebook that he believed the EU move to freeze Russian assets by indefinitely using a qualified majority vote would “cause irreparable damage to the Union”.
“Hungary protests against this decision, and will do everything it can to restore a lawful state of affairs,” he wrote.
Russia’s central bank said that the EU’s plans to use its assets were illegal, and that it reserved the right to employ all available means to protect its interests.
The bank added that it was suing the Brussels-based central securities depository Euroclear in a Moscow court over what it said were damaging actions, affecting its ability to dispose of its funds and securities.
Euroclear holds 185 billion euros of the total assets frozen in Europe. It has been subject to Russian lawsuits in Moscow courts since the EU froze the assets in 2022, following Russia’s invasion of Ukraine. REUTERS
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