For months, European Union officials have been focused on a plan to use frozen Russian assets to provide Ukraine with a loan that could help Kiev carry the next phase of the war. It is becoming increasingly clear that if the plan fails, the EU will be left with only weak alternatives, says Jeanne Smialek, head of the Brussels office for The New York Times.
A loan plan in which the European Union would use assets held by the Central Bank of Russia in Belgium to transfer 140 billion euros to Ukraine was supposed to be approved at a political meeting of EU leaders last month. Instead, Belgium unexpectedly blocked it at the last minute.
Belgian officials fear that their country could be held accountable for payments if Russia sues or asks for the money back. To mitigate this risk, they are asking other European countries to explicitly commit to sharing some of the potential burden through guarantees, but Slovakia opposes the idea. Belgium is also pressuring the European Commission to consider other ways of transferring funds to Ukraine.
EU Options
The Commission presented the alternatives in a letter to national governments. The New York Times consulted the letter. One option is for the EU to issue joint bonds to raise the money Ukraine needs. Another is for individual member states to offer Ukraine direct grants. However, both approaches have disadvantages: joint loans would be costly due to high interest rates, and direct grants would represent an excessive burden for countries that already have large debts.
Given this, politicians, diplomats, and external experts in Brussels often express confidence that the plan with a loan for frozen Russian assets will ultimately work – not because it is simple, but because the alternatives seem even worse at a time when the stakes are extremely high.
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