What's happened
EU leaders have decided against using frozen Russian assets to fund Ukraine, opting instead for a loan backed by the EU budget. The decision aims to meet Ukraine's financial needs without provoking Russian retaliation, amid ongoing negotiations and concerns from Belgium about legal risks.
What's behind the headline?
Strategic Shift in EU Ukraine Support
The EU's decision to avoid directly using Russian assets marks a significant shift in its approach to funding Ukraine. While the bloc aims to provide a €90bn loan over two years, it prioritizes stability and legal safety, especially for Belgium, which holds most of the frozen assets. This move underscores the complex balance between moral support for Ukraine and the geopolitical risks of provoking Russia.
Political and Legal Risks
Belgium's opposition highlights the legal and financial dangers of releasing Russian assets, with concerns about Russian retaliation and lawsuits, such as the one from Russia's Central Bank against Euroclear. The EU's fallback plan to borrow directly is unlikely to be activated soon, given the unanimity required, but remains a potential option.
Broader Implications
The decision reflects broader geopolitical tensions, with the US and other allies watching closely. While the US pushes for a peace deal, European leaders are focused on maintaining unity and avoiding internal divisions. The outcome will influence future EU-Russia relations and the bloc's capacity to support Ukraine without escalating tensions.
Forecast
The EU will likely continue to seek a delicate compromise, balancing support for Ukraine with legal and diplomatic constraints. The focus on guarantees and safeguards suggests a cautious approach that prioritizes long-term stability over immediate financial gains, shaping the future of EU foreign policy and defense support.
What the papers say
The New Arab reports that EU leaders backed away from using frozen Russian assets due to fears of serious repercussions, emphasizing the high stakes for Ukraine's financial stability. Reuters highlights the EU's decision to borrow funds instead of using assets, citing concerns over legal risks, especially for Belgium, which holds most of the assets. The Guardian provides detailed insights into the political negotiations, noting Belgium's objections and the EU's efforts to secure guarantees. France 24 discusses the broader geopolitical context, including US efforts to broker peace and the internal divisions within the EU. The Moscow Times underscores Russia's opposition, with Moscow welcoming the failure to use its assets, framing it as a victory for Russia's stance.
How we got here
Since Russia's invasion of Ukraine in 2022, the EU has sought ways to support Kyiv financially. Initial plans to use frozen Russian assets for Ukraine funding faced opposition, especially from Belgium, which holds most of the assets and fears legal repercussions. The EU has now agreed to borrow funds through a joint mechanism, avoiding direct use of Russian assets, while reserving the right to revisit asset use if Russia refuses reparations.
Go deeper
Common question
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Can Ukraine legally access frozen Russian assets to fund its budget crisis?
With ongoing conflict and a significant funding gap, Ukraine's potential to tap into frozen Russian assets has become a hot topic. While these assets are held abroad, especially in Belgium, legal and diplomatic hurdles complicate their use. Many wonder if Ukraine can legally access these funds, what options the EU has to support Kyiv, and what risks are involved. Below, we explore the key questions surrounding this complex issue and what it means for Ukraine's future.
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What are the broader implications of Zelensky’s push for EU action on Russian assets?
Ukrainian President Zelensky has called for the EU to take stronger action against Russian assets to support Ukraine. This move raises questions about how the EU might respond, potential legal and diplomatic consequences, and what it means for Ukraine-EU relations. Here are some key questions and answers to understand the situation better.
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