Belgium is blocking negotiations on a proposed ‘reparation loan’ for Ukraine, stalling the European Commission’s urgent proposal backed by seven EU leaders.
The leaders of Poland, Estonia, Ireland, Latvia, Lithuania, Finland, and Sweden wrote to European Council President António Costa and Commission President Ursula von der Leyen to express strong support for the Commission’s proposal, emphasising the need for reliable, long-term financial backing to strengthen Ukraine at this pivotal moment.
“”Supporting Ukraine in their fight for freedom and independence is not only a moral obligation – it is also in our own self-interest,” they wrote in the letter, seen by Reuters.
The Loan Mechanism
The proposed approach, detailed in an official announcement, involves leveraging frozen Russian Central Bank assets — estimated at approximately €185 billion, primarily held by Euroclear in Brussels — as the basis for offering Ukraine a low-interest loan.
The loan concept, which von der Leyen first presented during her annual State of the EU address in September, is designed to formally prevent the assets from being confiscated. Kyiv would not start repaying the loan until the war concludes and Moscow has fulfilled its reparations obligations.
The proposed loan, totaling €90 billion, would cover two-thirds of Ukraine’s financing needs for the next two years. The remaining financial requirement could be met by issuing joint EU debt, which would be secured against the bloc’s upcoming long-term budget. This latter approach could also potentially replace the entire loan scheme.
The Commission president stated that leveraging the Russian central bank assets frozen in Belgium shortly after the full-scale invasion in February 2022 remains “the most effective way” to back Ukraine’s defense efforts and economy.
Belgium digs in
The European Commission’s proposal faces resistance from both the Belgian government, concerned about costly lawsuits and Russian retaliation, and Euroclear, which deems the proposed safeguards insufficient.
Euroclear cautioned that lifting sanctions early could prevent it from meeting obligations to the Russian Central Bank. Belgian officials fear Moscow could demand asset returns, leading to potentially massive compensation claims if successful in court.
Belgian Prime Minister Bart De Wever sent a letter to von der Leyen late last month, hardening his opposition to the Commission’s plans.
“I will never commit Belgium to sustain on its own the risks and exposures that would arise from the option of reparations loan,” he wrote.
He argued the mechanism could hinder a peace deal on Ukraine. If the EU plan fails, Belgium’s leader suggested the frozen Russian assets, instead of aiding Ukraine, might be leveraged to pressure Moscow into negotiations.
“Hastily moving forward on the proposed reparations loan scheme would have, as collateral damage, that we, as the EU, are effectively preventing reaching an eventual peace deal,” De Wever warned.
In his opinion, it is “very probable” that Russia will not be recognised as the “losing party” and will thus have the right to reclaim its sovereign property currently frozen under EU sanctions.
De Wever warned that the loan posed a risk of causing turmoil in EU financial markets. He also cautioned that if the Russian assets eventually had to be returned, EU taxpayers might be forced to cover the full cost.
EU High Representative for Foreign Affair and Security Policy Kaja Kallas, known for her hawkish stance toward Moscow, insists the reparations loan remains the Union’s central strategy. “It will definitely strengthen the European position vis-à-vis Moscow, that’s very clear. We need to move on with this,” the Estonian leader said.
In her view, the loan would send a triple message: “To Ukraine, that we are there to help them defend themselves. Second message to Moscow, that they can’t outlast us. And the third message is to Washington, that we are taking very strong and very credible steps.”
Kallas added that the Russians “don’t want this reparations loan to happen. So our response should do exactly the opposite.”
According to people present at her meeting with MEPs from the European People’s Party, Kallas appeared to downplay Belgian fears of potential Russian lawsuits. She insists she takes them into account.
“I don’t, in any way, diminish the worries that Belgium has, but we can address those. We can shoulder those risks together,” she said.
Another Option: Joint EU Borrowing
The European Commission is also considering issuing joint EU debt, similar to the “NextGenerationEU” post-pandemic recovery fund, to provide Ukraine with a loan.
Von der Leyen views the option of joint borrowing with little enthusiasm, even though the Commission asserts that both it and a reparations loan are equally viable. She suggests that dipping into taxpayers’ pockets would be necessary for joint borrowing, a measure she believes Europeans would strongly reject.
“To be very clear – I cannot see any scenario in which the European taxpayers alone will pay the bill. This is also not acceptable,” she said.
Supporters of the loan option, such as Germany, France, and the Baltic states, view it as vital aid for Kyiv, especially as EU national budgets are facing intense pressure. This stance is maintained despite De Wever’s support for the joint-debt alternative.
“It is very important that we increase the pressure on Russia, for instance by tapping frozen assets,” said Dutch defense minister Ruben Brekelmans.
“It is high time we used the reparations loan to support Ukraine,” said his Swedish counterpart Pål Jonson. He argued that the combination of high debt levels and sluggish growth across Europe makes it increasingly difficult for member states to finance aid from their own budgets.
Belgium Sets Conditions as Russia Issues Threats
The Belgian prime minister stated that his agreement to the loan is conditional upon other governments immediately pledging to cover the full sum, should Russia request the return of its assets.
“I will not agree unless these guarantees … are delivered and signed by member states at the time of decision,” he wrote.
Moscow’s position, articulated by Russian President Vladimir Putin, strengthens Belgium’s reservations. Putin has branded the EU’s potential “confiscation” of Russian assets as “stealing property,” asserting that such a move would critically damage confidence in the bloc.
“My government is preparing a package of retaliatory measures in case this happens,” Putin said at a press conference during his visit to Kyrgyzstan, as quoted by Kommersant.
Former Russian president and prime minister Dmitry Medvedev went further, warning: “If the unhinged European Union tries to steal Russia’s frozen assets in Belgium by issuing this so-called reparations loan, such actions could be considered under international law a special kind of casus belli, with all the consequences that entails for Brussels and individual EU states.”
He cautioned that in such a scenario, the return of the funds to Russia “might no longer happen through the courts, but in the form of real reparations paid by Russia’s defeated enemies,” suggesting the loan could spark a war — one he insisted Russia would win.
Commission Looks to Bypass Hungary’s Veto
The European Commission’s proposal includes safeguards for member states and financial institutions, such as a solidarity mechanism with national or EU budget backing. Crucially, the loan avoids formal confiscation, sale, or transfer of Russian asset ownership, minimizing legal risks.
The Commission proposed formally banning the return of frozen Russian assets to Russia. This ban, adoptable by qualified majority, sidesteps a potential Hungarian veto. Currently, the assets are frozen under EU sanctions requiring unanimous renewal every six months.
Dr. Spasimir Domaradzki of the University of Warsaw’s Faculty of Political Science and International Studies posits that offering Ukraine a reparations loan is the appropriate policy.
“First, this proposal makes it clear that Putin’s aggression must be met with the aggressor’s own means. Second, Ukraine urgently needs this support — without it, the country could face a dramatic situation as early as next year. Third, Europe is signalling that it will not back down in the face of blackmail and that it stands by the principles of international law, which Russia has been violating since 2014,” he told EURACTIV.pl.
He advocated for member states to first agree on an equitable, solidarity-based distribution of any future costs. According to him, “Only that approach can minimise the risks and ensure consistent action.”
He added that if Belgium is concerned about legal costs from utilizing Russian assets, all member states must share the responsibility to protect Belgium from bearing those consequences alone.
According to Domaradzki, the loan could provide meaningful, immediate support to a country on the front line of Russian aggression.
“And if the West ultimately loses the fight for Ukraine, the cost for everyone will be many times higher.”
