Out with Belgium, out with the European Central Bank. The list of possibilities for using frozen Russian assets, for Ursula von der Leyen, narrows with the passing of the hours. The summit of 27 European leaders called to give the green light to new financing for Ukraine is now upon us and the main instrument, chosen by the Commission, appears increasingly at a standstill.
After Euroclear’s no and the new closure of the Belgian government, a blow to von der Leyen’s project came from the Eurotower: the ECB – the Financial Times found, citing Frankfurt sources – cannot give the necessary guarantees for 140 billion to be lent to Kiev. The point, for the community executive, remains the same: the guarantee that the Reparations Loans for Kiev will still be repaid, with or without Moscow’s frozen assets.
«Such a proposal is not under consideration because it would violate the rules of the European Treaties which prohibit monetary financing», is the position expressed by the ECB. According to the proposal in the pipeline at Palazzo Berlaymont, EU member countries would provide state guarantees to cover the reimbursement risks on the mechanism that leverages Russian assets frozen in Euroclear. Seen from the ECB, such an architecture – even if Frankfurt would act as guarantor to a financial institution and not to a State – effectively constitutes monetary financing: that is, the ECB would still be financing, albeit indirectly, the State which is not able to find the necessary liquidity.
Hence Frankfurt’s no, which came on the very day in which the heads of cabinet of the European commissioners meet to examine the measures that the college of commissioners is called to approve the following day. The ECB’s outburst is no surprise for von der Leyen.
Christine Lagarde had always expressed a certain caution about the use of Russian assets. But, of course, it did not lighten the climate around the Commission. Von der Leyen, in the next few hours, should shed light on the legislative proposal on the use of Russian assets. It is very likely that this will happen anyway. But, at the same time, the spokesperson of the European Commission, Paula Pinho, explained that the EU executive is “evaluating alternatives”.
The important thing is that “liquidity is guaranteed” to Kiev’s coffers, added the spokeswoman. The question is what these alternatives are. The most logical one leads to a bridge solution with loans that hinge on the common European debt. We need unanimity from the 27. We therefore also need Viktor Orban’s approval. A theoretically impossible green light even if Ukraine’s fate is being played out on multiple tables: the European one, but also the one leading to talks between the USA, Russia and Ukraine. The two floors intersect. Washington’s side, in this sense, could also unblock Hungary’s trench, at least on the use of common European debt.
For von der Leyen, the alternatives also lead outside the strict borders of the EU. To the G7, or to non-EU countries that hold – in significantly smaller quantities than Belgium – Russian assets. In this sense, the Commission could knock on Norway’s door again. In contact, away from the spotlight, they remain alive. Oslo had closed the door on financial guarantees in recent days but perhaps not definitively. Tomorrow the issue of the use of Russian assets is on the agenda at the meeting of the Permanent Representatives. Some cards may be revealed.
But prudence remains to reign. Von der Leyen put his face to it in the dossier. A total rejection of the use of Russian assets would be a major blow for her. Ukrainian President Volodymyr Zelensky is also aware of this. «The «most delicate» issues of the negotiations concern «the frozen territories and assets», explained the leader of Kiev.