Time is running out, winter haunts a Ukraine increasingly in need of funds in the midst of a war with Russia that shows no signs of ending, and the European Union remains stuck searching for funds to support Kiev. Which will need, as Brussels now calculates, almost 136 billion euros to cover its macrofinancial and military needs until 2027. And the first funds should be ready by next spring.
The main obstacle to the fastest route of aid, the use of frozen Russian assets to issue a “reparation loan” of up to 140 billion euros, continues to be Belgium, on whose territory most of these assets are located and which blocks this alternative, fearing retaliation from Moscow. There are two alternatives to this path, but they could be very costly for all Twenty-Sevens. As the President of the European Commission, Ursula von der Leyen, warned in a letter distributed this Monday to all capitals outlining the three possible “options” for helping Kiev, other formulas would imply that each country must dedicate up to 0.27% of its gross national income each year to support Ukraine.
In the case of Spain this would mean just over 4 billion per year. And this, provided that the war ends in 2026 and that third countries also provide complementary aid, warns the letter to which EL PAÍS has had access.
Brussels has never hidden its preference for the “repair loan” route, which would require the use of assets frozen at Euroclear, a financial institution based in Brussels. This was also made clear last week by Von der Leyen herself, when, in a speech before the European Parliament, she stated that this formula is “the most effective way to support the defense of Ukraine and its economy”, as well as being “the clearest way to make Russia understand that time is not on its side”, she said on Thursday.
The next day, the German politician met with Belgian Prime Minister Bart De Wever for at least an hour. A meeting behind closed doors and at the end of which there was no official comment, a symptom of the lack of progress faced by a Belgium which since the last European summit, at the end of October, has not yet given in despite the time to find a solution – by the end of the year, if it wants to be able to start helping Ukraine before the spring, when the funds will run out – is rapidly running out.
In a further attempt to convince the Belgian executive, Von der Leyen is now proposing “legally binding and irrevocable” guarantees from other member states. It is also committed to ensuring that coverage of the risks associated with the use of frozen Russian assets continues even after the end of the war. After meeting with NATO Secretary General Mark Rutte, the President of Finland, Alexander Stubb, acknowledged that the De Wever government, with whom he will also meet this Monday, has legitimate “political and legal concerns” which he said he trusts can be resolved before the next meeting of European leaders in December, because Ukraine’s “survival” is at stake.
The letter that Von der Leyen sent to the capitals this Monday corresponds to the mandate that they gave her in the last European Council, in which they asked her to present all possible options to help Ukraine and to clearly explain the implications of each of them (one of the criticisms leveled at the Commission was that of having arrived at the last meeting of European leaders without having clarified all of Belgium’s doubts about guarantees against possible retaliation from Moscow).
The first of the options now authorized is a package of “non-repayable aid financed by Member States”. That is, each country provides voluntary bilateral subsidies to the Union, which it will then convert into non-repayable aid to Kiev. The minimum to be collected for the period 2026-27 would be 90,000 million euros, which would mean an “impact for Member States of between 0.16 and 0.27% of their gross national income per year”, specifies the Commission. Given its gross national income in 2024, this would mean that Spain would contribute up to around 4.3 billion euros per year.
A second option is for the EU to finance aid to Ukraine by contracting debt on financial markets, the least desired option so far, especially by those EU partners with less fiscal space to increase their deficit or debt, such as France or Italy. The warning launched by the Commission on this option does not seem to allay these concerns: “Measures involving guarantees from Member States are more likely to have an impact on the national debt and deficit”, recalls Brussels, which also underlines that “in addition to the processing of loans, the interest costs that Member States have to cover as contributions would directly affect their deficit and debt”.
An alternative to this would be, the Commission points out, for EU loans to be covered by the EU’s fiscal space. But beyond the fact that this option would require a “change to the current rules”, Brussels points out that the measure could have an impact on the rates the EU pays for other programs financed by loans in the capital market, such as the NextGeneration EU pandemic recovery funds or the SAFE loan program for the joint purchase of arms for Ukraine.
The third and final option presented by Von der Leyen’s letter is the path of the reparation loan which Belgium continues to oppose but which, it insists in another demonstration which is the one favored by the Community Executive and the majority of European capitals, “does not require any direct loan from the Union on the capital markets to finance the loan to Ukraine”.
In an attempt to convince the De Wever government, the letter assures that this option will have “legally binding, unconditional and irrevocable” guarantees from other member states. Guarantees that would also extend to “risks arising from bilateral investment treaties related to the freezing of Russian sovereign assets”, but “also after the lifting of the asset freeze”.
Brussels also promises “further legal guarantees” and that “residual risks will be shared between member states”. Among others, with a commitment to “cover the costs and financial consequences resulting from arbitral awards or other judicial decisions against a Member State” due to the use of frozen assets.
Although Belgium is the main beneficiary of these additional guarantees, given that Euroclear hosts the majority of Russian financial assets, the Commission proposes to extend the initiative to use the frozen funds to “cash balances associated with Russian sovereign assets held by other financial institutions in the Union, such as commercial banks, but excluding central banks”. Something that would add around 25,000 million euros, he estimates. It also guarantees that, if this third “repair loan” option is activated, it will be designed in such a way that “the financial stability of the institutions hosting the fixed assets is preserved” and that all risks are mitigated.
Each of the three options, emphasizes Von der Leyen, requires a “collective commitment” on the part of the Twenty-Seven and “strong solidarity” on the part of the entire EU. The head of the European Executive also recalls the “urgency” of finding a solution and hopes that the agreement will be reached at the next meeting of European leaders, in mid-December in Brussels.
