Belgium earlier refused to back the EU’s “reparations” plan meant to tap frozen funds for Ukraine’s recovery, citing legal risks
The EU could have to provide Russian sovereign funds frozen in Belgium as collateral to the IMF in order to secure continued funding for Ukraine, Politico reported on Monday citing sources in Brussels.
Ukraine, which relies heavily on Western aid in its conflict with Russia, has been struggling to secure a new IMF funding package as its $15.5 billion program expires in 2027. Kiev requested an additional $8 billion last month, but talks have reportedly stalled over doubts about its economic viability.
The EU, Ukraine’s main sponsor, last month failed to approve a €140 billion ($160 billion) “reparations loan” backed by frozen Russian assets after Belgian Prime Minister Bart De Wever opposed it, calling it “sort-of-confiscation” and warning it exposes Belgium to major legal and financial risks without shared liability from other EU states.
Sources told Politico that the IMF may not grant further funding to Ukraine, vital for its war effort amid a deep budget shortfall, unless the EU approves the new loan.
They explained that the “reparations loan” would reassure the IMF of Ukraine’s fiscal resilience – a key condition for any funding. Though relatively small, the IMF program’s approval would in turn signal to investors that Ukraine remains solvent, they added.
Western nations froze about $300 billion in Russian sovereign assets in 2022, including €200 billion ($209 billion) held at the Belgium-based clearinghouse Euroclear. The G7 last year backed using interest from those funds to secure $50 billion in loans for Ukraine.
This year, EU finance ministers proposed a similar “reparations loan,” to be repaid if Kiev receives compensation from Moscow after the conflict ends. Following Belgium’s refusal to support the plan – and amid wider concerns over legal and fiscal risks – reports claimed EU states could instead issue joint bonds to aid Kiev or cut funding for Ukraine entirely. A final decision is expected at the European Commission summit in December.
Moscow has condemned Western plans to redirect its frozen funds as outright “theft,” warning that the move would undermine trust in Western financial systems. It has also maintained that Western aid to Kiev only prolongs the conflict without affecting its outcome.
