Given the abysmal state of EU-Russia relations, it is ironic just how closely Europe’s political predicament resembles a great Russian tragedy: all politically possible plans to support Ukraine are alike (insofar as they are undesirable); each politically impossible plan is impossible in its own way.
Much as the characters in Leo Tolstoy’s Anna Karenina suffer myriad personal challenges – and catastrophes – in their pursuit of spiritual and material fulfilment, the EU has learned in recent weeks that it must overcome multiple near-insurmountable obstacles to continue to finance Kyiv’s war effort.
Harnessing immobilised Russian sovereign assets? Belgium cries non (and nee). Issuing common EU debt? Nem, shouts Hungary. Bilateral member state grants? Everyone screams in unison: No, nein, non, nej, and не!
What do to? The answer that the EU appears to have settled on is almost disarming in its simplicity (and stupidity). Ignore those pesky Belges!
Sure, Prime Minister Bart De Wever’s vociferous opposition to the “reparations loan” hasn’t shifted one iota since EU Commission chief Ursula von der Leyen floated it back in September.
And sure, De Wever’s domestic position has been considerably strengthened since the botched EU summit in October, with the right-wing Flemish nationalist receiving staunch support from his five-party coalition government (which includes French-speaking centrists) as well as from his traditional political enemies (such as the bilingual, Marxist Workers’ Party).
And sure, Belgium’s negotiating stance has been further bolstered by France’s reluctance to harness €19 billion in Russian sovereign assets – making De Wever’s resistance to the EU’s (and Paris’) push to use the €185 billion in Kremlin funds held in Brussels seem, in relative terms, eminently reasonable.
And sure, US peace efforts to end the war have added another string to De Wever’s rhetorical bow: that proceeding with the loan risks depriving the EU of critical leverage in future peace negotiations with Russia, as well as cash for rebuilding Ukraine once the war is over.
And sure, over the past week Belgium has demanded almost 40 pages of amendments to the Commission’s legal text. These include the demand that member states withdraw from more than 20 active bilateral investment treaties with Moscow: a requirement which, even if endorsed by other EU countries, is legally impossible to fulfil in less than a week.
And sure, De Wever’s suggestion that the Commission’s plan to permanently freeze the Kremlin’s cash is illegal was echoed this week by none other than European Central Bank President Christine Lagarde, who said the loan scheme is the “closest” she’s seen to complying with international law – which, strictly speaking, doesn’t even mean it’s close at all. (Technically, I’m the closest I’ve ever been to dying: a process I fear the reparations loan might be accelerating.)
A slippery syllogism
Still, EU diplomats and officials argue, Belgium must eventually back down. When asked why, most resort to a quasi-Kantian syllogism that even avowed Germanophiles like De Wever are likely to find tendentious.
It goes something like this:
Ukraine has colossal funding needs.
These needs must be addressed.
Addressing them with common EU debt is impossible, because of Hungary’s veto.
Addressing them with bilateral grants is impossible, because EU deficit and debt levels are too high.
Ergo, the reparations loan – the only other option – must be agreed.
But the argument can easily be flipped on its head. De Wever, after all, claimed just last week that his country was being asked to do the “impossible”. Why shouldn’t we instead interpret Budapest’s threatened veto as a bluff, and deduce the necessity of joint EU debt? (A handful of EU diplomats I’ve spoken to have made exactly this argument.)
In fact, all four of the argument’s premises are likely false; or, at the very least, not entirely true.
First, although Ukraine’s total funding needs are considerable, its core funding needs are not – although, given that Kyiv is set to run out of money in April, they are relatively urgent.
By the Commission’s own estimates, Ukraine requires just €20.1 billion in additional funding to stay solvent next year. This is just 0.1% of the EU’s total GDP: roughly the size of Europe’s toilet paper industry. And (to continue the scatological theme) other Western allies, including Canada and the UK, will almost certainly help plug the hole.
Second, the EU’s debt and deficit levels are indeed high, but they are not so vertiginous as to preclude addressing Kyiv’s immediate financing needs.
In fact, it is worth recalling that almost exactly a year ago eurozone finance ministers were gravely warning us that a “contractionary fiscal stance” in 2025 is “appropriate… in view of the high levels of deficit and debt”.
Just weeks later, von der Leyen announced an €800 billion defence splurge; Germany, for good measure, forked out another €1 trillion to revamp its infrastructure and military. Given this, are we really supposed to believe the EU can’t collectively cough up a measly few billion for Kyiv?
Third, it is, unfortunately, a fantasy to believe that Ukraine’s total funding needs (which include military support and reconstruction) will be properly addressed. After all, if we’ve learned anything in recent years, it is that the EU has refused to plug its own massive financing needs. What hope does Kyiv have if Brussels doesn’t even have hope for itself?
Ignorez les Belges!
Confronted with this reasoning, many diplomats and officials dig in their heels. After all, they note, the reparations loan doesn’t technically require the support of Belgium, but legally only requires backing of a qualified majority of member states (i.e. 15 member states representing 65% of the bloc’s population).
Moreover, the assets themselves were indefinitely immobilised this week through qualified majority voting, without Belgium’s support. Why not, then, do the same for the loan itself, and push ahead regardless of Belgium’s objections?
Although technically possible, the EU almost certainly realises that such a move would be self-defeating. Not only would it permanently foment anti-EU sentiment in one of the bloc’s founding members and most pro-EU countries, but, by alienating the government of Europe’s de facto capital, it would represent political suicide. The EU would, in effect, be cannibalising itself.
It would also raise numerous, even more complex legal issues. The Commission’s proposal essentially mandates private institutions holding sovereign Russian assets to purchase EU debt. Would Euroclear, the Brussels-based securities depository housing most of the assets, comply with this law if it were told not to do so by the Belgian government? Would it have to?
Let us assume, then, that the EU isn’t actually mad enough to plough ahead without Belgium. What, then, can we expect next week?
