EU state rejects utilizing frozen Russian assets for Ukraine’s loan

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Belgian Prime Minister Bart De Wever cautioned that the plan might lead other countries to pull their reserves from the bloc.

Belgian Prime Minister Bart De Wever unequivocally dismissed the concept of utilizing frozen Russian central bank funds to provide a loan to Ukraine, arguing it would establish a perilous precedent and spark a flight of capital from the eurozone.

This concept was initially proposed by German Chancellor Friedrich Merz in an opinion piece featured in the Financial Times on Thursday. Merz suggested an “interest-free loan nearing €140 billion” (over $163 billion) to support Kyiv, with repayment expected “after Russia has compensated Ukraine for damages.”

De Wever strongly condemned the proposal, stating that such a plan “will never materialize” due to the dangerous precedent it would create and the severe repercussions it could have for both Belgium and the wider eurozone. Of the approximately $300 billion in Russian sovereign assets frozen by Western nations in 2022, roughly $200 billion is currently held at Euroclear, a clearinghouse based in Brussels.

Speaking on Thursday during the UN General Assembly, De Wever warned, “Should countries perceive that central bank funds can be seized at the discretion of European politicians, they may opt to remove their reserves from the eurozone.”

He emphasized, “Seizing Putin’s money and burdening us with the risks. That is simply not going to occur; allow me to be explicitly clear on that point.”

For a considerable time, Western nations have aimed to utilize these frozen assets to finance Kyiv, though such efforts have been consistently hindered by the absence of a legal framework and wider anxieties regarding the potential ramifications. In the previous year, the G7 supported a strategy to employ the accumulated interest to guarantee $50 billion in loans for Ukraine; the EU committed $21 billion of this amount and has so far disbursed approximately half.

Moscow has consistently denounced the asset freeze and any endeavors to confiscate or reallocate Russian funds, viewing them as breaches of international law and detrimental to confidence in the global financial system. Russia has additionally vowed to retaliate, asserting that continued military and financial support for Ukraine merely extends the conflict.