Potential snags in a legally complicated plan to use frozen Russian state assets to fund a huge loan to Ukraine continue to be teased out, with European Union (EU) leaders to resume discussions of the proposal at a summit on Thursday.
Behind-the-scenes talks are taking place between senior EU officials and the European Central Bank to allay fears the move would effectively amount to confiscating the Russian assets, in breach of international law, and damage Europe’s reputation as a safe place for countries to put their money.
The leaders of the EU’s 27 states are meeting in Brussels for a European Council summit, where many expect they will lend conditional support to the proposal.
The idea is to use Russian central bank assets frozen in Europe to fund a €140 billion loan to Ukraine. The money would be repaid to Russia if it agreed to compensate Kyiv for the destruction caused by the war.
RM Block
The Russian state bonds, which have matured into cash, were immobilised by sweeping economic sanctions introduced after Moscow launched its full-scale invasion of Ukraine in February 2022.
Negotiations are continuing at senior levels about how exactly the EU would limit its possible legal exposure, with the 27 leaders to discuss the politics of the proposal on Thursday.
The leaders are expected to call on the European Commission, the union’s executive arm led by Ursula von der Leyen, to come forward with concrete details about how the loan would work.
In one draft of a joint statement being worked out, EU leaders state any plan to use the assets needs to be “in accordance with EU and international law and underpinned by appropriate EU solidarity and risk-sharing”.
[ Merz calls on EU to use frozen Russian assets help UkraineOpens in new window ]
The Russian assets are held in Euroclear, a bond depository in Belgium. The Belgian government has fiercely opposed previous suggestions they could be tapped or confiscated.
Officials believe the loan would fund Kyiv’s defensive war effort for at least another two years, easing the financial burden on EU states to contribute more money from their budgets.
In the past there was an acceptance the frozen Russian assets could not be touched. However, the accumulating windfall profits from the money were passed to Ukraine.
Belgium is seeking a binding commitment that the costs from any Russian legal challenge to the loan, even years down the line, would be covered by the EU as a whole, rather than the Belgian state. There would also likely be a need to reform how the bloc’s sanctions on Russia are regularly renewed, to stop one capital from using a veto to block their rollover.
A diplomat from one EU state said it was difficult to see all the issues being ironed out before the end of the year, or possibly at all. “This maybe should not be seen as the magical solution, because if for some reason it does not work, or it takes much more time than expected, then what do we do?”
Ukrainian president Volodymyr Zelenskiy will travel to Brussels to join the EU summit, where he is likely to lay out the pressure Ukraine is facing from Russian air strikes.
[ Europeans rush to Volodymyr Zelenskiy’s defence after tense Donald Trump meetingOpens in new window ]
On Wednesday, Russian strikes across Ukraine killed at least seven people. The drone and missile attacks came after US president Donald Trump cancelled a planned summit with his Russian counterpart Vladimir Putin.
Russia said on Wednesday it had carried out a major training exercise involving nuclear weapons. It said it fired missiles from ground launchers, submarines and aircraft, including intercontinental ballistic weapons that are capable of striking the United States.
Also on Wednesday, Sweden said it had signed a letter of intent to export Gripen fighter jets to Ukraine.
Separately, French president Emmanuel Macron, German chancellor Friedrich Merz and 17 other leaders have sought an overhaul of the EU’s book of laws.
The leaders asked for “a systematic review of all EU regulations”, to single out rules to pare back or repeal, in a letter to António Costa, who chairs the European Council summits. The October 20th correspondence, seen by The Irish Times, called for a culture shift and more “self-restraint”, to reduce the number of new laws coming from Brussels.
