EU considers "Plan B" for Ukraine after summit failure with "reparations loan" - Politico
Kyiv • UNN
The European Union is considering a plan to raise tens of billions of euros in common debt to support Ukraine. This comes after Belgium blocked the use of frozen Russian assets for financial aid to Kyiv.
The EU is considering a "plan B" for Ukraine after failing to support a "reparations loan" at the last summit, Politico reports, writes UNN.
Details
According to three EU diplomats, "EU countries may be asked to raise tens of billions of euros in joint debt under a 'plan B' to keep Ukraine afloat after Belgium scuttled plans to use frozen Russian assets as financial support for Kyiv."
"The option of joint debt to help Ukraine is expected to be included in a document that the European Commission will present to EU capitals in the coming weeks, along with a reparations loan and a third option: letting Ukraine go, diplomats said. (They clarified that only Hungary would support the third option)," the publication states.
Regarding "plan B," as the publication writes, "several leaders raised the issue of a joint debt plan for Ukraine at the European Council summit last Thursday, amid growing clarity that Belgium would not drop its objections to using frozen Russian assets held in Brussels' Euroclear system," an EU diplomat said.
"The prospect of EU countries, many of which are already heavily indebted, being forced to go further into debt to help Ukraine will focus minds. Kyiv faces severe financial difficulties at the end of the first quarter of 2026 if it does not receive a new injection of funds, and Europe is currently the only reliable option," the publication states.
The approaching "cliff edge" means that the European Commission will have to work overtime to prepare its options papers as quickly as possible, and a final decision by leaders on the chosen path must be made no later than the EU summit on December 18. EU ambassadors are to discuss the implications of last Thursday's fiasco at a Coreper meeting on Wednesday.
Given the risks of further debt accumulation, two diplomats stressed that "most, though not all, EU countries still consider using frozen Russian assets to be the 'most preferred' option." Joint debt was likely proposed as a "scare tactic" to force countries to act.
"What's the point of discussing alternative solutions? This [reparations loan] is the only thing we have," said a fourth diplomat. "And we have to be honest about it."
They also pointed to poor timing to explain why Thursday's EU meeting did not yield the expected outcome. Belgian Prime Minister Bart De Wever, who is currently engaged in difficult budget negotiations at home, only saw the European Commission's latest legal proposal for a reparations loan on the morning of the summit, two diplomats said. It was hard to imagine him signing off on anything right now that could expose Belgium to financial liabilities, the publication writes.
The publication notes that "in 2023, Hungary vetoed a plan to finance Ukraine, but at the last minute backed down, allowing a €50 billion loan to be approved in February 2024. However, at that time, the EU was not alone: the US continued to provide financial assistance to Ukraine."
"The bottom line: the EU has faced a similar situation before and successfully delivered on its promise to support Kyiv. But this time, the situation looks more daunting given the absence of other major financial backers and the fact that some large EU countries (ahem, France) are facing serious budget problems. A reparations loan is another uncharted territory for the EU," the publication notes.