European Union leaders are coming to terms with the idea that an emergency funding solution to keep the Ukrainian economy afloat will have to be deployed after Belgium raised the bar higher to unlock a reparations loan that would bolster Kyiv’s finances.
The solution could see the EU raise money on the markets to deliver a non-repayable grant to Kyiv that would cover its most immediate financial and military needs in 2026.
This, in turn, would give leaders more time to break the deadlock over the proposed loan, a bold attempt to channel the immobilised assets of the Russian Central Bank to Ukraine.
The bulk of the assets, around €185 billion, is kept at Euroclear, a central securities depository in Brussels. This makes Belgium the cardinal vote in the debate.
Initially, EU leaders were expected to be able to assuage the Belgian reservations and sign up to the unprecedented project during their next meeting on 18 December.
In a new twist in the long-running saga, Belgian Prime Minister Bart De Wever penned a scathing letter to Ursula von der Leyen, blasting the reparations loan as “fundamentally wrong” and ridden with legal and financial pitfalls.
“Why would we thus venture into uncharted legal and financial waters with all possible consequences, if this can be avoided?” De Wever tells the president of the European Commission in the letter. “I will never commit Belgium to sustain on its own the risks and exposures that would arise from the option of a reparations loan.”
Upping the ante, De Wever demands “legally binding, unconditional, irrevocable, on-demand, joint and several guarantees” to cover the €185 billion of the assets and all the potential fallout, such as arbitration costs, interests, investment opportunity loss and even the “quantification of financial impact to the Central Bank of Russia’s credit”.
He also asks for total coverage for Euroclear’s holdings in “Russia-friendly jurisdictions”, which he said could be subject to retaliatory measures from the Kremlin.
“Some may hold the belief that this is only a theoretical exposure. l am making the point that this danger is, to the contrary, real and likely to happen,” De Wever writes.
By raising the bar so high for the guarantees, which are a crucial element to unlock the reparations loans, De Wever makes its approval exponentially more difficult.
It is unlikely that the other leaders will be able to show up at the summit in December with multi-billion guarantees that rely for the most part on a hypothetical calculus. For some countries, such a complex structure would require the blessing of their parliament.
The hurdles are weighing heavily in the minds of EU officials and diplomats as they rush to break the deadlock before Ukraine runs out of foreign aid. The country expects a fresh injection of assistance in the second quarter of 2026 at the latest.
Adding to the pressure is an $8.1 billion programme that the International Monetary Fund (IMF) is meant to grant Ukraine. For the IMF to make a final decision, it will need firm commitments by European allies to ensure Kyiv’s macro-economic stability.
The mounting urgency has drastically raised the odds for a bridge solution to plug the gap. The interim financing could be backed by either national guarantees or the EU budget, which currently forbids borrowing for a country outside the bloc.
Tweaking the budget’s rules would need unanimity, a tall order given Hungary’s adamant opposition to aiding Kyiv in any capacity. The same obstacle would remain if leaders chose joint debt as the long-term arrangement to support Ukraine.
The Trump factor
In his letter, De Wever goes beyond law and economics and dives headfirst into politics.
The Belgian leader warns that pushing the reparations loan at this particular stage could imperil the White House’s efforts to secure a peace deal to end Russia’s war.
“Hastily moving forward on the proposed reparations loan scheme would have, as collateral damage, that we, as the EU, are effectively preventing reaching an eventual peace deal,” De Wever tells von der Leyen.
“We can hardly engage the Russian sovereign assets for multiple purposes at the same time. Either they are immobilised for the purpose of financing reconstruction of Ukraine, or they are spent now on financing war efforts or Ukraine’s core budget.”
De Wever argues that it is “very probable” that Russia will not be declared the “losing party” in the conflict and therefore be entitled to recover its sovereign property currently under sanctions. If this happens, he adds, the reparations loan will fall apart and European taxpayers will have to foot the bill themselves.
This section in the letter stands in stark contrast with the position advocated by other leaders, who see the Russian assets as the bloc’s most powerful leverage.
“We must quickly reach an appropriate agreement by the EU leaders’ summit in December at the latest to strengthen our negotiating position and send another signal of solidarity and support to Ukraine,” German Chancellor Friedrich Merz said on Thursday.
Von der Leyen has also framed her proposal under a moral lens to “make Russia pay”.
“To be very clear – I cannot see any scenario in which the European taxpayers alone will pay the bill. This is also not acceptable,” she said this week.
The internal disagreements come at a precarious time for Europeans, who were caught off guard by a 28-point peace plan secretly drafted by US and Russian officials and are now scrambling to close ranks and project political unity.
The original draft pitched a highly controversial model that would use the Russian assets for Washington’s and Moscow’s commercial benefit. The provision is believed to have been removed after high-level talks in Geneva between the US and Ukraine.
Still, the text highlighted the value of the Russian assets. For some, it confirmed the need to approve the reparations loans. For others, it prompted second thoughts.
Hours before De Wever sent his letter to von der Leyen, Russian President Vladimir Putin warned that touching the funds would amount to the “theft of someone else’s property”.
(Under the proposal, Moscow would be allowed to recover the immobilised assets if it agreed to compensate Ukraine for the damages caused by the war.)
“The government of the Russian Federation, by my assignment, develops a package of reciprocal measures in case this happens,” Putin said during a briefing.
In awkward timing for Kyiv, the debate on the reparations loan coincides with a spiralling corruption scandal that precipitated the resignation of Andriy Yermak, President Volodymyr Zelensky’s powerful chief of staff and main negotiator in the peace process.
A diplomat told Euronews that President Zelensky will “have to straighten out the situation as it looks really bad”, and the optics make it significantly more challenging for Europe to sign off on another round of funding.
Still, diplomats insist that aid for Ukraine, a country on the front line of Russian aggression, should not be linked to the scandal.
For its part, the European Commission, which has been criticised for not taking De Wever’s initial concerns seriously, is putting on a brave face.
“These are uncharted waters, so it’s legitimate to ask questions, to share concerns,” said Paula Pinho, the Commission’s chief spokesperson. “We are really doing our utmost to address those concerns in a satisfactory manner so that everybody can feel confident and comfortable with any solution that is put forward eventually.”
Asked if the Commission was ready to override Belgium and push the reparations loan with a qualified majority, Pinho said: “We’re not there yet.”
