Politico: EU countries will have to allocate billions for guarantees of a "reparation loan" for Ukraine, with Germany bearing the largest share
Kyiv • UNN
EU countries will have to allocate billions of euros to guarantee loans to Ukraine totaling up to 210 billion euros, with Germany providing support of up to 52 billion euros. The European Commission presented these figures after proposing a "reparation loan" for Ukraine of 165 billion euros from frozen Russian assets.
EU countries will need to separately allocate billions of euros for guarantees for urgently needed loans of up to 210 billion euros for Ukraine, with Germany having to provide a backstop of up to 52 billion euros, Politico reports with reference to relevant documents, writes UNN.
Details
The European Commission presented "staggering" sums to diplomats last week after unveiling a proposal for a 165 billion euro "reparations loan" for Ukraine using the monetary value of frozen Russian assets, the publication writes.
This support, which will be proportionally distributed among the bloc's countries, is necessary to obtain approval for the loan from Belgian Prime Minister Bart De Wever. The Belgian leader opposed the use of sovereign Russian assets due to fears that his country might eventually be obliged to return the money to Moscow. About 185 billion euros of frozen Russian assets are managed by the Brussels-based financial depository Euroclear, while another 25 billion euros are scattered across the bloc in private bank accounts.
However, the total amounts for each country could increase if Kremlin-friendly countries such as Hungary refuse to join the initiative, although non-EU countries could help if they wish by covering part of the overall guarantee, the publication writes. Norway was considered a possible candidate until its finance minister, Jens Stoltenberg, distanced Oslo from the idea.
On Friday, Hungary vetoed the issuance of new EU debt to cover Ukraine's budget deficit, placing the burden on leaders to persuade De Wever to support the use of Russian assets at the EU leaders' meeting on December 18, rather than dipping into their own national treasuries, the publication notes.
German Chancellor Friedrich Merz was in Brussels on Friday evening to assure De Wever that Germany would provide 25 percent of the reserve fund, the largest share among all countries.
"We had a very constructive exchange of views on this issue," Merz said after dinner with the Belgian leader. "Belgium's particular concern about the question of how to use frozen Russian assets is undeniable and must be addressed by any possible solution in such a way that all European states bear the same risk."
What the loan entails
The proposed reparations loan provides 115 billion euros to finance Ukraine's defense industry over five years, while 50 billion euros will cover Ukraine's budget needs. The remaining 45 billion euros of the total package will repay a G7 loan to Ukraine issued last year.
According to European Commission presentations, the funds will be distributed in six payments over the year.
As noted, "certain checks and balances will be put in place to prevent misappropriation of funds." For example, regarding defense spending, this will include ensuring that contracts and spending plans are acceptable to the European Commission.
The European Commission will also detail Ukraine's financial needs and identify where the government receives military and financial assistance, allowing EU capitals to track cash flows to Ukraine, the publication writes.