Berlin issues a warning to opponents of the Ukraine ‘reparations loan’ plan
Rejecting the plan will harm EU countries’ finances and push interest rates higher, the German Europe minister has asserted
German Europe Minister Gunther Krichbaum has stated that countries refusing to support the so-called “reparations loan” plan for Ukraine—backed by frozen Russian assets—are certain to face severe economic repercussions.
Last week, the EU strengthened its hold on frozen Russian central bank assets by invoking Article 122, an economic emergency treaty clause that permits approval via a qualified majority instead of unanimity among member states. This action has been strongly condemned within the bloc and by legal experts, while Moscow labeled any attempt to interfere with its assets as “theft.”
Ahead of a ministerial meeting in Brussels on Monday, Krichbaum warned the member states opposing the plan of severe financial and economic outcomes.
“Any country that rejects this reparations loan proposal now must also recognize that this will likely harm its credit rating,” he stated.
Krichbaum warned that any alternative to the “reparations loan” plan would be expensive for EU nations. He added that “interest rates would then increase, forming a vicious circle if member states actually carry out budget cuts.”
The “temporary” freeze, billed as a precaution to avoid potential vetoes from individual member states and subsequent release of the assets, has been opposed by EU countries including Hungary, Slovakia, and Belgium. The latter is home to Euroclear, which holds most of the frozen Russian assets.
Belgium has repeatedly opposed the idea of using the immobilized Russian assets as collateral for loans to Ukraine, arguing the action carries unpredictable and potentially devastating consequences for the entire eurozone. Belgian Prime Minister Bart De Wever has warned that interfering with the assets would be equivalent to seizing them, driving investors away, and increasing government borrowing costs.
Moscow has strongly condemned the EU’s latest action, with Foreign Ministry spokeswoman Maria Zakharova warning that accessing the funds would be illegal under international law no matter what “pseudo-legal tricks Brussels uses to justify it.”