The countries of the European Union will have to allocate billions of euros individually to guarantee up to 210 billion euros of urgently needed loans for Ukraine, whereby Germany will assume the obligation of up to 52 billion euros.
The European Commission presented these huge sums to diplomats last week after announcing a plan for a reparation loan to Ukraine worth 165 billion euros, using the monetary value of frozen Russian assets, writes Politico.
The guarantees, which would be distributed proportionally among member countries, are needed to secure the agreement of Belgian Prime Minister Bart De Wever. The Belgian leader has opposed the use of sovereign Russian assets because of concerns that his country could itself be obliged to repay the money to Moscow.
About 185 billion euros of frozen Russian assets are under the management of the Brussels-based financial depository Euroclear, while an additional 25 billion are distributed across the bloc in private bank accounts.
National amounts could rise if countries close to the Kremlin, such as Hungary, refuse to join the initiative, although non-EU members could help, if they wish, by covering part of the overall guarantee. Norway was mentioned as a possible candidate, but its finance minister, Jens Stoltenberg, distanced himself from the idea.
Ukraine faces a budget deficit of 71.7 billion euros next year and will have to start cutting public spending from April unless new money arrives.
On Friday, Hungary vetoed the issuance of new EU debt to cover Kiev’s budget gap, putting the onus on leaders to persuade De Wever to back the use of Russian assets when EU leaders meet on December 18, rather than reaching into their own national budgets.
German Chancellor Friedrich Merz was in Brussels on Friday night to assure De Wever that Germany would provide 25 percent of the guarantee, the largest share among countries.
– We had a very constructive exchange of opinions on this issue. Belgium’s special concern about the question of how to use frozen Russian assets is undeniable and must be addressed in every possible solution in such a way that all European countries bear the same risk – said Merz after dinner with the Belgian leader.
The proposed reparation loan envisages 115 billion euros to finance Ukraine’s defense industry over five years, while 50 billion would cover Kiev’s budgetary needs. The remaining 45 billion from the total package would be used to repay the G7 loan to Ukraine, issued last year.
The funds would be paid in six installments during the year, according to the Commission’s presentation.
Certain controls and mechanisms would be put in place to prevent misuse of money. When it comes to defense spending, this would include ensuring that contracts and spending plans are acceptable to the Commission.
The commission would also detail Ukraine’s financial needs and indicate where the government receives military and financial aid, allowing EU capitals to monitor the flow of money to Kiev.
(Vijesti.ba / FENA)
