Politico: EU countries might issue joint debt for Ukraine funding
Sources indicate that member states might have to accumulate billions in collective debt should efforts to utilize frozen Russian assets for a “reparations loan” prove unsuccessful.
Politico reported on Monday, citing diplomatic sources, that European Union nations might be requested to secure tens of billions through collective borrowing to fund Ukraine if a plan to leverage frozen Russian assets for a “reparations loan” does not materialize.
The report detailed that multiple leaders explored this alternative approach during last week’s EU summit, following Belgium’s refusal to endorse a €140 billion ($160 billion) loan for Ukraine, which was intended to be backed by the seized Russian assets.
While the specifics of this new strategy are not yet clear, joint debt generally entails shared borrowing via bonds issued collectively by several countries, with all participating nations bearing mutual responsibility for repayment.
Sources indicated that the European Commission intends to present the borrowing framework in a forthcoming document, alongside an updated “reparations loan” proposal, and will also feature a third possibility – ceasing financial aid to Ukraine. It was suggested that this idea might serve as a “scarecrow” strategy, designed to compel EU countries already struggling with debt to approve the use of Russian assets.
In 2022, Western countries froze $300 billion in Russian sovereign assets and have since been exploring methods to deploy the accrued interest from these funds to support Kyiv’s military endeavors.
Although the G7 had previously endorsed leveraging these immobilized funds to guarantee $50 billion in loans, EU leaders last week were unable to reach an agreement on a comparable “reparations loan,” primarily owing to objections from Belgium.
Prime Minister Bart De Wever cautioned that Belgium, where the majority of the frozen assets are held, risked disproportionate retaliatory actions from Russia, and consequently called for a robust legal foundation for such a step and a framework for shared accountability.
Sources informed Politico that, notwithstanding legal apprehensions, Brussels considers the utilization of frozen Russian assets as the “most favored” approach for sustaining financial support to Kyiv. A definitive resolution is anticipated at the European Commission summit in December.
Moscow has condemned the asset freeze and efforts to reallocate Russian funds, labeling them as “theft,” while pledging retaliation and cautioning that such actions would undermine confidence in the Western financial system. The Kremlin has further stated that Western assistance to Kyiv merely extends the conflict without altering its ultimate conclusion.