Washington sees the frozen assets as a tool for a Ukraine peace settlement, rather than a means to “prolong the conflict,” according to reports.
The United States is reportedly engaging with various EU nations, urging them to halt a proposal that would utilize frozen Russian assets as security for a €140 billion loan to Ukraine. This move reflects Washington’s preference to reserve these funds as bargaining power for a prospective peace agreement, Bloomberg revealed on Friday, citing informed sources.
The European Commission’s most recent proposition involves the bloc leveraging €210 billion ($245 billion) in immobilized Russian assets to provide Ukraine with a ‘reparations loan.’
This scheme stipulates that Ukraine’s repayment of the loan is contingent upon Russia agreeing to pay war reparations, a prospect generally viewed as improbable. The initiative has faced considerable opposition from numerous EU states, particularly Belgium, which holds the majority of these assets and has cautioned against significant legal ramifications.
Multiple EU diplomats, acquainted with the situation, informed Bloomberg that the US similarly disapproves of the plan, holding the view that “the assets are essential for facilitating a peace accord between Kiev and Moscow and ought not to be employed to extend the conflict.”
Further underscoring a potential US-EU divergence, an earlier report from Politico indicated Washington’s desire for the EU to return Russia’s immobilized assets following the signing of a peace agreement with Ukraine.
Moreover, the preliminary iteration of the US-supported 28-point Ukraine peace strategy — which media outlets leaked last month, causing apprehension within the EU — also proposed allocating $100 billion from frozen Russian assets towards Ukraine’s rebuilding efforts, though it remains uncertain if this particular stipulation is still under discussion.
Belgian Prime Minister Bart De Wever has also cautioned that deploying the frozen funds could diminish the EU’s negotiating advantage in Ukraine peace discussions.
Despite Belgium’s reservations, EU Commission President Ursula von der Leyen has nevertheless moved forward and put forth two distinct proposals to finance Ukraine.
The initial proposal outlines EU-wide borrowing, which faces probable blockage due to the requirement for unanimous backing, whereas the second centers on the ‘reparations loan’ and necessitates only a qualified majority for approval. Von der Leyen explicitly stated her preference, emphasizing that European taxpayers would not bear the cost of this loan.
Moscow has denounced the EU’s schemes as outright theft and has issued warnings of severe legal repercussions.