Hopes of agreeing a new way of funding Ukraine’s war effort were dashed after opposition from Belgium, which hosts most of the Russian central bank funds immobilised in the EU at the Brussels-based institution Euroclear.
EU leaders agreed at a summit in Brussels on Thursday to merely ask the European Commission to present “options for financial support” for Ukraine, without direct reference to Russian frozen assets.
Earlier drafts, in contrast, said the proposals should involve “the possible gradual use of the cash balances” associated with the immobilised assets.
“The EU is committed to addressing Ukraine’s pressing financial needs for the next two years, including support for its military and defence efforts,” the European Council president António Costa tweeted after the talks.
Ursula von der Leyen, the European Commission president, insisted there had been an agreement on the principle of the reparation loan.
“There are points to be clarified and [we need] to have a deep dive and to work more on them. So in other words, we agreed on the what – that is the reparation loan – and we have to work on the how – how we make it possible.”
Costa, who chaired the meeting, stated that both the presidents of the European Central Bank and the Eurogroup, who took part in the meeting, agreed that the reparations loan respected international law and that all technical issues could be resolved.
“That means that this solution is feasible,” Costa added.
The conundrum of how to fund Ukraine’s war effort as the US steps back will be discussed again at another EU summit in December. The reparation loan remains an option, but is less likely to be ready early next year as Ukraine had hoped.
Earlier on Thursday Zelensky urged leaders to take this “great” decision to fund Ukraine’s defence as soon as possible.
“Anyone who delays this decision is not only limiting our defence but also slowing down your own progress,” he told EU leaders, promising that Ukraine would spend a lot of money buying European weapons.
“The time to act on Russian assets is now and I urge for your full support.”
The European Commission hopes to use the assets at Euroclear as the basis for a €140bn (£122bn) loan to Ukraine, which would only be repaid once Russia paid compensation for the war.
Officials believe they have found a way of making Russia pay for its war without confiscating the assets or breaching property rights.
The Kremlin says the scheme is theft and has vowed to pursue any individual or country deemed to have taken Russian money.
Leaders need the agreement of Belgium, which hosts €183bn of Russian central bank assets at Euroclear – 86% of all Russian state assets in the EU and two-thirds of the worldwide total.
Belgium’s prime minister, Bart De Wever, said the biggest problem was how to guarantee that the cash was available immediately if something went wrong.
Arriving at the summit earlier on Thursday, he threatened to oppose the plan without guarantees that the rest of the EU would cover the cost if Russia came looking for its money.
“If you want to do this, we will have to do this all together. We want guarantees if the money has to be paid back that every member state will chip in. The consequences cannot only be for Belgium,” he added.
EU leaders tried to meet his concerns with a promise of “burden sharing and coordination” with the G7, but it was not enough to secure an agreement.
About one-third of Russian state assets are held outside the EU, including in Japan (€28bn), the UK (€27bn), Canada (€15bn) and the US (€4bn). While the UK and Canada are expected to make similar moves, EU officials are less hopeful about the US, which holds a small but symbolic amount of Russian state assets.
The loan plan remains on the table, with many unanswered questions. It depends on EU unanimity to keep Russian assets frozen for a long time. Hungary’s Russia-friendly government has frequently delayed EU sanctions and, although it has never dared to block them, its anti-Ukraine rhetoric raises questions about its future support.
Hungary’s prime minister, Viktor Orbán, skipped the discussions on Ukraine to attend events in Budapest commemorating the 1956 Hungarian revolution, which was crushed by Soviet repression. As now customary, the EU adopted a statement of support for Ukraine – including future financing – without Hungary’s backing.
Earlier in the day, the EU agreed its 19th package of sanctions against Russia, targeting liquefied natural gas for the first time. The move came soon after the US imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, the first restrictive measures passed by the Trump administration.
Latvia’s prime minister, Evika Siliņa, said an agreement on the loan would strengthen Zelensky in any peace talks with Putin.
“I believe [Zelensky] will be much stronger to enter those negotiations if those negotiations take place,” she added.
Ireland’s taoiseach, Micheál Martin, said his government supported the plan and did not see any implications for Irish neutrality.
“This cannot be a repeating cycle where … big countries feel, like Russia, they can go in and destroy a place and expect other people to pay for the reconstruction afterwards,” he added.
Zelensky expressed hope that the US would eventually supply long-range Tomahawk missiles.
“It was like sanctions: before it was unbelievable and now we see the decisions on these energy sanctions, which are very important,” he stated.
But he downplayed reports of a 12-point peace plan that emerged earlier this week, suggesting it was the work of “some very good friends” seeking to pre-empt “some plan from Russia” promoted by another country that he did not name.
The plan, which was first reported by Bloomberg, called for a ceasefire, prisoner exchanges and the creation of a peace board chaired by Donald Trump – taking inspiration from the US administration’s Gaza plan.
Zelensky said Russia showed no sign of wanting to stop the war, citing the recent bombing of a kindergarten.
“More pressure on Russia and they will sit and speak and I think this is the plan,” he added.
