EU’s €140 Billion Ukraine Loan Stalled by Belgian Veto Over Risk Concerns
A bold European Union plan to issue a €140 billion loan to Ukraine, backed by profits from frozen Russian central bank assets, has been halted after Belgium refused to grant its essential approval. The autumn summit in Brussels concluded without a breakthrough, highlighting deep divisions within the bloc over how to share the financial and legal risks of the unprecedented proposal.
The Core of the Dispute: Belgium’s Demand for Guarantees
The proposal’s failure is largely attributed to the firm resistance of Belgian Prime Minister Bart De Wever. Belgium holds a uniquely exposed position because the majority of the immobilized Russian assets—estimated at €175 billion—are held at Euroclear, a central securities depository based in Brussels.
Prime Minister De Wever publicly insisted that Belgium would not proceed unless other EU member states provided binding guarantees to mutualise the risks. He framed the issue plainly, asking who would be held accountable if the loan failed or if Russia retaliated.
“If you take the money from my country … I am not willing, in a week’s time, to pay €140 billion,” De Wever warned summit partners. His government fears that any Russian retaliation—whether through legal action or targeting Belgian financial infrastructure—would fall disproportionately on Belgium without clear shared liability from its EU partners.
How the Proposed “Reparations Loan” Would Work
The stalled plan, often called a “reparations loan,” was designed as a creative workaround to direct asset confiscation, which is a legal red line for many nations. The core idea involved:
Using the cash balances generated by the frozen Russian assets held at Euroclear.
Transferring these funds to the European Commission or a special-purpose vehicle.
Issuing zero-coupon bonds backed by EU and G7 guarantees to raise €140 billion for Ukraine.
Ukraine would receive the funds for its 2026-27 budgetary and military needs, with repayment tied to a future settlement where Russia provides war reparations.
This mechanism aimed to provide Ukraine with immediate, massive financial support while technically avoiding the outright seizure of Russian sovereign property.
Summit Outcome: A Delay, Not a Defeat
Faced with Belgium’s veto, EU leaders could not approve the loan. The summit’s final communiqué instead tasked the European Commission with presenting new “options as soon as possible” to cover Ukraine’s future needs, effectively deferring a final decision.
European Commission President Ursula von der Leyen acknowledged the complexity, stating, “This is certainly a topic… very complex. There are points to be clarified and we have a deep dive to make.”
Support for the plan’s concept remains, but leaders like German Chancellor Friedrich Merz echoed Belgium’s concerns about liability. “I would use the same argument if the assets were in Germany,” Merz said, underscoring that risk-sharing is a universal concern within the bloc.
Why This Loan is Critical for Ukraine
The urgency behind the proposal is driven by Ukraine‘s massive funding gap. Its estimated budgetary and war-related needs for 2026-27 are between €130-140 billion. With future U.S. aid uncertain and European nations seeking a sustainable, large-scale funding mechanism, leveraging frozen Russian assets has emerged as a leading, though contentious, solution.
The challenges, however, are profound. Beyond the immediate risk-sharing dispute, the plan navigates untested legal waters under international law, faces threats of retaliation from Moscow, and raises concerns in financial markets about the precedent of using immobilized sovereign assets.
What Happens Next?
For the EU Ukraine loan proposal to regain momentum, the European Commission must present a revised plan that reconciles Belgium’s demands for ironclad guarantees. This requires a legally sound structure that clearly defines liability among all 27 member states.
Many diplomats expect a final decision to be pushed to the next EU summit in December. The path forward depends on whether the bloc can prove it is ready to share risk, guarantee one another, and navigate the complex legal and geopolitical terrain as a united front. The stalled summit serves as a stark reminder of the difficulty in translating bold political vision into a binding financial mechanism, especially when high-stakes geopolitical risk is involved.
