Europe faces a question of “money today, or blood tomorrow”, its leaders were told as they entered crunch meetings on whether to approve a financial structure using frozen Russian assets to enable a mega loan to Ukraine.
The leaders of European Union member states met for a session of the European Council on Thursday, talks which are expected to go all day, for discussions on using frozen Russian assets held in European countries to guarantee a loan to Ukraine to keep it solvent. The European Union believes Kyiv needs a cash injection of $160 billion to pay for its military and civil expenses for the next two years, and that it faces running out of money as soon as Spring if urgent action isn’t taken.
This morning, President Zelensky said if the deal isn’t passed, “there will be a big problem for Ukraine”. Ursula von der Leyen, meanwhile, stated: “we have one ultimate goal in this European Council, and that is peace for Ukraine, peace through strength, and for that, Ukraine needs to have a secure funding for the next two years… the most important part is that, at the end of the day, we have secured the funding for Ukraine”.
In the past, European states have helped fund Ukraine’s national defence by using the interest earned on the approximately $250 billion in Russian assets held by European banks. Under the new plan, Ukraine would be loaned the Russian capital itself, which is being counted against hypothetical future Russian reparation payments to Ukraine. In essence, Russia would pay Ukraine war reparations following an assumed future military defeat, which would allow Kyiv to repay the loan to Brussels, which would in turn allow the EU to give Russia its seized assets back, states the BBC.
Several key European partners profess concern about this approach, and no less than the government of Belgium, the home of the Euroclear securities system where the majority of that Russian wealth is held. Belgium has so far blocked the idea because it is worried Russia will, in time, take its revenge on their country for allowing the money entrusted there to be used in the war. Thursday’s meetings are largely intended to find ways to either assuage or override Belgium’s concerns.
Hungary is another European state standing against the war loan, and against cash support for Ukraine in general, feelings stemming both from its bad relationship with Kyiv that well predates the Russian invasions, and out of its desire not to push Europe into an all-out war with Russia. Expressing his case against the loan, Hungary’s Prime Minister Viktor Orban is reported to have said before going into today’s talks: “The whole idea is stupid. … There are two countries which are at war – it’s not European Union, [it’s] Russia and Ukraine – and the European Union would like to take away the money of one of the warring party and then to give it to another one. It’s marching into the war. The Belgian prime minister is right, we should not do that.”
The loan idea is also opposed behind the scenes by the United States, The Times of London states overnight, with Washington reportedly lobbying European nations to block the deal because it is antithetical to President Trump’s ongoing bid for peace. Taking Russia’s frozen assets and using them to fund the war removes incentives for Moscow to sit at the negotiating table and agree to a deal, it is said the Trump team believes, because the prospect of reintegrating its economy with the wider world becomes a more remote prospect.
The Times cited an unnamed Ukrainian official as their source, and also printed a dismissal by White House press secretary Anna Kelly, who said: “Spitballing from anonymous sources who were not present for these discussions should not be taken seriously”.
Meanwhile the pressure on European countries to approve the loan deal continues. Poland, perhaps the most hawkish country in Europe on Russia — given in any theoretical future war its national territory would inevitably become the eastern European battleground — painted a picture of the Ukraine loan as a necessary down payment on future peace.
Prime Minister and former Eurocrat Donald Tusk said of the proposed deal: “we have a simple choice: either money today, or blood tomorrow… I’m not talking about Ukraine only, I’m talking about Europe.”
Russia, for its part, seems to have promised blood either way. President Vladimir Putin called the loan proposal “piracy”, the European states proposing it “swine” or “piglets”, and Moscow warned of “the harshest” retaliation.
