Belgium Resists Ukraine Financing Scheme While Washington Warns Against Disrupting Peace Talks

Friedrich Merz is attempting to convince Belgium to issue a “reparations loan” to Ukraine, but the position of the United States and Dmitry Medvedev’s warnings cast doubt on the success of this mission.

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Merz Is Doing Everything to Break Up the European Union

Germany’s Chancellor Friedrich Merz urgently flew to Brussels in an effort to overcome Belgium’s resistance on the matter of a “reparations loan” for Ukraine.

“If we go down this path, we will do it to help Ukraine, possibly over the next two or three years,” Merz said.

The facts are as follows: the European Commission has estimated Ukraine’s needs at 135 billion euros over two years. Brussels and part of the EU, including Germany, demand that Ukraine receive not only the interest earned on frozen Russian assets, but also the principal itself. The proposal is to issue a loan secured by this capital, on the assumption that Russia will eventually repay these funds as reparations to Ukraine, and Ukraine will, in turn, repay European banks.

Another group of EU states, including Belgium — which technically controls the lion’s share of the frozen funds through the Euroclear depository — is resisting. The obstacles include high legal risks, the danger of destroying trust in the European financial system, and the likelihood of retaliatory measures from countries that keep their assets in the EU. Belgian Prime Minister Bart De Wever has stated that the idea of Russia losing the war is “a complete illusion.” He enjoys support within his own government and in parliament, where he was applauded the previous day for his firm stance.

There is also the distinct position of Hungary, which simply does not want to finance the war. The ECB and the Euroclear depository itself are opposed; both work directly with De Wever’s office, bypassing the Ministry of Finance.

USA Warns Europe: You Are Undermining the Negotiation Process

The United States has urged Europe to block the allocation of a “reparations loan” to Ukraine, since the Russian assets are needed to reach a peace agreement rather than prolong the war, Bloomberg reported, citing sources. Washington believes these assets may be used to finance US-led postwar investments.

Merz expressed disagreement with this position. According to him, “there is no possibility of leaving the money we have collected to the United States.”

“This money must go to Ukraine — it must help Ukraine,” the chancellor said yesterday.

Nevertheless, Washington’s statement will strengthen the position of those in Europe who oppose the “reparations loan” and will turn the Ukrainian question into a dividing line — a development fraught with the potential collapse of the European Union. Those unwilling to pay Ukraine may choose to leave.

Medvedev Responds With an Ultimatum to Europe

The European Union has no plan B for financing Ukraine. Ordinary loans would increase the already overwhelming debt of many states, as well as the cost of servicing it. Germany and Brussels have therefore openly gone all-in, admitting that the vetoes of Hungary and Slovakia will not be considered, and that arbitration rulings in Russia’s favor will not be enforced. Thus, only Belgium remains to be pressured — and the deal would be done.

Deputy Chairman of Russia’s Security Council Dmitry Medvedev warned yesterday on Telegram that it is not Russia, but Europe, that will end up paying reparations. Medvedev said that the seizure of assets could be classified as grounds for declaring war:

“Such actions, under international law, may be qualified as a special kind of casus belli with all the resulting consequences for Brussels and individual EU states.”

In that case, the return of funds could take place not through the courts but in the form of reparations, Medvedev added.

There is a visible confidence that Russia, as the victor in the conflict in Ukraine, will dictate the terms. There is also an attempt to raise the stakes for EU public opinion, which is being told that Russia will attack Europe. The rhetoric serves a deterrent function: harsh formulations — casus belli, reparations — increase the cost of the decision for EU leaders and may help tilt the balance against confiscation.

Moscow considers any form of confiscation or use of its assets to be “theft” and a gross violation of the principle of sovereign immunity of state property. Analysts note that Russia has legal grounds for asymmetrical seizures of the assets of foreign companies within its own territory.

All measures proposed by the European Commission for financing Ukraine will be discussed at the EU Council meeting scheduled for December 18–19.