The EU has €210 billion in Russian funds: Why is Belgium blocking the transfer of that money to Ukraine?

BrusselsThe European Union wants to continue helping Ukraine, but without spending any more money. The solution that has long been... proposes the European CommissionThe proposal, now supported by a large majority of member states, is to allocate Russian funds frozen within the European bloc to Kyiv. However, there is one obstacle they cannot overcome: Belgium's opposition. The initiative has been controversial from the outset and raises legal questions regarding international law, which is of particular concern to the Belgian government. The vast majority of this money, around 85%, is held in a Brussels-based investment fund, Euroclear. For this reason, the government led by Bart De Wever fears that Belgium will have to bear the potential economic and legal consequences. Belgium refuses to support it and, so far, has not yielded to pressure from Ursula von der Leyen and the vast majority of its European partners. The EU's High Representative for Foreign Affairs and Security Policy, Kaja Kallas, herself admitted on Monday that the measure's approval will be "difficult." However, the Belgian government has softened its stance against the measure, and diplomatic sources indicate that in recent days the discussion has shifted from whether the initiative should be approved to what the legislative text should be.

In this sense, this week is expected to be key to unblocking the initiative. This Monday, EU foreign ministers are meeting in Brussels, and the main European leaders are meeting with Volodymyr Zelensky in Berlin. These two meetings should put the initiative on track for approval at the European Union summit of heads of state and government this Thursday. The President of the European Council, António Costa, has already warned that the leaders will not leave the table until an agreement is reached.

The most "credible" option to help Kyiv

Faced with Belgium's reluctance, Von der Leyen has put forward two other options: issuing more common debt at the EU level or having each member state increase bilateral aid to Ukraine. But neither alternative satisfies a majority of European partners. As the EU's foreign policy chief insisted this Monday at the EU Foreign Affairs Council, the "most credible" option at the moment remains an initial disbursement of €90 billion from Russia to Ukraine, out of the €210 billion held by the European bloc. The Russian money would be delivered as a loan, and would be repaid to Vladimir Putin's regime if it contributes to the reconstruction of Ukraine once the war is over. This is one of the clauses that the European Commission argues guarantees the initiative complies with international law. But Belgium is not satisfied. Belgium also fears that the courts will force it to bear the burden of, for example, the eventual repayment of all that money alone, even though the European Commission assures it that the EU as a whole would cover it. Furthermore, the De Wever government expressed concern about threats and the possibility of political retaliation from Moscow, particularly against Belgium. In fact, the Bank of Russia has already filed a complaint against the Euroclear investment fund in Russian courts. It should be noted that the initiative does not require unanimity and can be passed with a qualified majority. Therefore, Belgium cannot veto the measure on its own. However, Brussels and the other European partners prefer Belgian approval, both as a political message of unity and because they believe it is better to have the support of the government of the country where most of the frozen Russian money is located.

Therefore, diplomatic pressure on the Belgian government has intensified in recent days. Among other leaders, German Chancellor Friedrich Merz, who had initially also expressed legal concerns about the measure, traveled to Brussels to meet with De Wever and try to resolve the situation. With the same objective, EU member states agreed last week to a legal reform through an emergency mechanism to permanently block Russian funds. This avoids the need to confirm the freeze every six months, which would allow more pro-Russian partners, such as Hungary and Slovakia, to oppose it given the intended use of the funds and unblock the money at the European level. The permanent block is a mere formality that paves the way for the transfer of Russian funds to Kyiv and is yet another way to pressure Belgium. In fact, everything suggests that the use of that money in Ukraine will be fully openly discussed at this Thursday's summit of European leaders, and diplomatic delegations in the EU anticipate long and difficult negotiations to convince De Wever.