LONDON, November 7. /TASS/. EU countries would have to pay €5.6 billion in annual interest indefinitely if they chose to borrow funds to finance Kiev instead of expropriating Russia’s frozen assets, according to The Financial Times.
The European Commission has circulated a document to member states outlining the bloc’s options for financing Ukraine. The paper, seen by the newspaper’s journalists, was prepared after the Belgian government blocked an initiative to seize frozen Russian assets.
It states that if EU countries fail to reach an agreement on Russia’s assets, they will have to allocate €140 billion to Ukraine through new debts or grants. Both options will potentially require adjustments to the fiscal policies of member states and directly affect their public deficits and debt. Of the €5.6 billion that EU countries will pay in interest each year, €1 billion will be paid by France, which already carries a high public debt, €675 million by Italy, and €200 million by Belgium.
The EC also warns that borrowing €140 billion can potentially lead to "potential knock-on effects both for market absorption and, notably, the rate that the Union will generally pay on its borrowing." "It cannot be discounted that it may also have additional indirect costs," the newspaper quoted the document as saying. EU countries and the European Commission will discuss these options in preparation for a meeting of EU leaders scheduled for December, which has been set as the deadline for a decision on financing Ukraine, according to the newspaper’s sources.
Regarding Belgium’s objections to the plan to seize Russian assets, the document says that financial guarantees from member states and the EU will supposedly "cover the residual risk of a successful enforcement of an arbitral award against a member state." Belgium is demanding such guarantees, as Euroclear - the company that holds the bulk of Russian assets frozen in the EU - operates under its jurisdiction.
The document also stresses the need to find a way to ensure the "continued immobilization" of Russian assets and to develop a mechanism that would allow them to remain frozen for longer than the standard six-month period. Belgium has also pushed for this measure, fearing that if any EU country blocked the extension of sanctions against Russia - which must be renewed every six months - the assets would automatically be unfrozen.
Russian assets and Belgium’s position
Most of Russia’s sovereign assets frozen in Europe - just over €200 billion - are blocked at Euroclear in Belgium. On October 23, participants at the EU summit in Brussels failed to reach an agreement on the use of Russian assets. Belgian Prime Minister Bart De Wever insisted that all EU countries must fully share the financial risks borne by his country, where €210 billion in Russian sovereign assets are blocked and which the European Commission plans to appropriate. He also warned that Russia could seize Western assets on its own territory or in friendly jurisdictions in retaliation, as a result of which Moscow "could come out on top" and the affected Western investors "would come to the Belgian government for compensation."
The prime minister further demanded guarantees from allied countries that Russia would receive immediate compensation if it "ever regains access to the assets."
Earlier, Russian Ambassador to Belgium Denis Gonchar told TASS that any form of expropriation of Russian assets would be regarded as theft. He warned that Moscow’s response would be "immediate" and would force the West to "count its losses.".