German media: Calls and obstacles surrounding the EU's "reparations loan" scheme for Ukraine

On Monday, leaders from seven EU member states urged the EU to move forward quickly with a proposal to finance Ukraine using frozen Russian assets. The EU announced the "reparations loan" mechanism last week, but according to media reports, the mechanism currently faces obstacles from Belgium and France.

The leaders of Estonia, Finland, Ireland, Latvia, Lithuania, Poland, and Sweden wrote to European Council President Costa (Antonio Costa) and European Commission President von der Leyen on Monday, December 8, stating, "Supporting Ukraine is not only a moral obligation but also in our own interest." "Therefore, we must quickly advance the European Commission's proposal to provide reparations loans to Ukraine using the cash balances of frozen Russian assets."

The European Commission officially proposed on Wednesday, December 3, to raise 90 billion euros through frozen Russian assets or international borrowing to cover Ukraine's tight military and other expenses in the war against Russian aggression.

The European Commission has stated that it prefers to use the Russian state assets frozen in the EU to provide this "reparations loan."

Belgium fears taking on the risk alone

However, Belgium, which holds most of the frozen Russian state assets, does not agree with the Commission's proposal and has expressed a series of concerns.

The Euroclear Bank, located in Brussels, Belgium, holds 18.5 billion euros in Russian state assets, making it the largest holder.

Belgium believes this makes it more vulnerable to retaliation from Russia and more exposed to financial risks from the loan scheme. A senior Belgian official told Reuters last week, "Belgium cannot accept taking on the risks of such an action alone."

Russia warned the EU and Belgium not to use its assets, calling the move equivalent to theft.

The European Commission said the plan does not constitute confiscation because the funds will be provided as a loan - although Ukraine would need to repay the loan only after Russia pays war reparations.

Von der Leyen said the proposal would also cover other EU financial institutions holding Russian assets. This means not only using the Russian assets held by the Euroclear Bank in Brussels.

Media: France strives to protect 18 billion euros in Russian assets from the EU's "reparations loan"

A December 8 article in the Financial Times reported that, in addition to Belgium, France holds the second-largest amount of frozen Russian state assets, but Paris has kept information about the names of private financial institutions and custodians holding these assets secret for over two years.

For some time, France has faced increasing pressure to use these Russian state assets to help Ukraine obtain financing. Paris's practice of keeping such information confidential has caused dissatisfaction among some European countries. As the European Commission advances the "reparations loan" plan, these frozen Russian assets in France have come under renewed scrutiny.

The report noted that the European Commission's plan aims to address Belgium's concerns. While French officials support the concept of the "reparations loan," they oppose the plan involving assets held by commercial banks, citing different contractual obligations between these institutions and Euroclear.

Several informed sources told the Financial Times that, in addition to the 18.5 billion euros in assets held by Euroclear, the remaining 25 billion euros in frozen Russian state assets are almost entirely stored in commercial banks in France and Belgium. The size of Russian assets in other EU countries is much smaller. Four informed sources revealed that the 18 billion euros in Russian central bank assets in France are mainly held by commercial banks. Two of the informed sources said that in addition to the funds in Euroclear, Belgium's commercial banks also hold 7 billion euros in Russian assets.

The Financial Times report also pointed out that the profits generated by Euroclear from the frozen Russian central bank assets - mainly proceeds from maturing securities - are being used to support the 5 billion dollar loan to Ukraine. Euroclear has no contractual obligation to pay interest to Russia. In contrast, private financial institutions usually have an obligation to eventually pay all or part of the interest generated by cash deposits to Russia. According to the European Commission's "reparations loan" plan, the EU will "according to the relevant contract terms" assume any interest owed by financial institutions to the Russian Central Bank.

Source: DW

Original: toutiao.com/article/1850942423505354/

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