contentious plan<\/a> to use frozen Russian assets for a loan supporting Ukraine\u2019s war effort.<\/p>\nAt the same \u200btime, EU governments and the European Parliament will continue discussing setting up a loan for Ukraine that would be based on Russian central \u200dbank assets.<\/p>\n
Friday\u2019s deal will not affect the financial obligations of Hungary, Slovakia and the Czech Republic, which did not want to contribute to the financing of Ukraine, the text said.<\/p>\n
Kyiv will only repay the EU loan based on joint borrowing once it receives war reparations from Moscow. Until then, the Russian assets will remain immobilised, while the EU has also reserved the right to use them to repay the loan, according to the text.<\/p>\n
\u201cIt\u2019s good in the sense that Ukraine will secure funding for two years,\u201d one unnamed EU diplomat told Reuters.<\/p>\n
The move followed hours of discussions among leaders on the technical \u200dand legal details of a loan based \u2060on frozen Russian assets \u2013 which turned out to be too complex or politically demanding to sort out at this stage, diplomats said.<\/p>\n
\u00a0<\/p>\n
\u201cWe have gone from saving Ukraine to saving face, at least that of those who have been pushing for the use of the frozen assets,\u201d a second EU diplomat said.<\/p>\n
The main difficulty in the use of the Russian money was providing Belgium \u2013 where about 185 billion ($217bn) of the total 210 billion euros ($246bn) of frozen assets are held \u2013 with sufficient guarantees against financial and legal retaliation from Moscow.<\/p>\n
The Kremlin has said it will launch legal action and seize foreign assets in Russia should the plan to use its assets go ahead.<\/p>\n
Belgium hesitant<\/p>\n
Prior to Friday\u2019s decision, analysts had said the use of frozen Russian assets was effectively the only viable option for EU funding Ukraine\u2019s war effort. The proposal, however, would be unprecedented, with German state assets not even seized during World War II.<\/p>\n
In advance of Thursday\u2019s meeting, German Chancellor Friedrich Merz had warned that the chances of agreement remained \u201c50-50\u201d.<\/p>\n
Belgium\u2019s Prime Minister Bart De Wever had told the European Parliament he remained deeply concerned about the legal and financial risks, having previously opposed the measures over fears Belgium could be forced to compensate Russia if courts later ruled the use of the frozen assets was unlawful.<\/p>\n
Belgium has demanded binding commitments from other EU states to cover all potential liabilities, and wants assurances that Russian assets held outside Belgium would also be used.<\/p>\n
Some countries, including Germany and the Netherlands, said they were prepared to back up the loan, while others, such as Italy and Bulgaria, were hesitant.<\/p>\n
Early on Friday, De Wever heralded the pivot towards borrowing on capital markets, saying EU leaders had avoided \u201cchaos and division\u201d with their decision.<\/p>\n
\u201cWe remained united,\u201d he said.<\/p>\n
Risk of antagonising Russia<\/p>\n
Russia\u2019s central bank said on Thursday it would sue European banks in Russian courts over any attempt to use frozen Russian assets to finance Ukraine.<\/p>\n
Chris Weafer, chief executive of the consultancy Macro-Advisory, told Al Jazeera that Moscow would likely see such a move as the start of a financial war with the EU.<\/p>\n
\u201cMoscow is now drawing a line on this issue,\u201d Weafer said, adding that Russia would likely \u201cretaliate based on what Europe does\u201d.<\/p>\n
Russia\u2019s central bank has already launched legal proceedings against Belgian financial institution Euroclear, which holds most of the frozen assets, as well as against institutions in France, Austria and the United Kingdom, Weafer said.<\/p>\n
Although the EU plan requires only a qualified majority rather than unanimity to move forward, Weafer said the bloc was unlikely to proceed without Belgium\u2019s backing. He added, however, that many EU states were increasingly reluctant or financially unable to continue funding Ukraine directly.<\/p>\n
\u201cSo the EU is desperately looking for an alternative source of money,\u201d Weafer said.<\/p>\n","protected":false},"excerpt":{"rendered":"European Union leaders have agreed to provide an interest-free loan to Ukraine to meet its military and economic…\n","protected":false},"author":2,"featured_media":641582,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[1789,13489,1700,2000,299,5187,1699,3663,1824,2190,2199,1477,12,285,332,7661,657],"class_list":{"0":"post-641581","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-belgium","9":"tag-bulgaria","10":"tag-economy","11":"tag-eu","12":"tag-europe","13":"tag-european","14":"tag-european-union","15":"tag-financial-markets","16":"tag-germany","17":"tag-hungary","18":"tag-italy","19":"tag-netherlands","20":"tag-news","21":"tag-politics","22":"tag-russia","23":"tag-russia-ukraine-war","24":"tag-ukraine"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115744412071004931","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/641581","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=641581"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/641581\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/641582"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=641581"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=641581"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=641581"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}