EU leaders gather to discuss massive loan to Ukraine

EU leaders meet in Brussels to seek agreement on a massive loan plan to fund Ukraine’s military and financial needs, amid divisions over using frozen Russian assets, economic risks, and opposition from several member states as negotiations intensify at a high-stakes summit

Brussels: European Union leaders are gathering Thursday for a summit aimed at agreeing on a massive loan to cover Ukraine’s military and other financial needs for the next two years.

The leaders will also discuss migration, the bloc’s enlargement policy, trade and economies, but working out how to fund most of the 137 billion euros (USD 160 billion) the International Monetary Fund says war-ravaged Ukraine needs is top priority.

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“It is up to us to choose how we fund Ukraine’s fight. We know the urgency. It is acute. We all feel it. We all see it,” European Commission President Ursula von der Leyen told EU lawmakers on the eve of the summit.

European Council President Antonio Costa, who is chairing Thursday’s meeting in Brussels, has vowed to keep leaders negotiating until an agreement is reached, even if it takes days.

Many leaders will press for tens of billions of euros in frozen Russian assets held in Europe to be used to meet Ukraine’s economic and military needs.

Such a decision has never been made before, and it comes with risks. The European Central Bank has warned that if Europeans appear willing to grab other countries’ money, it could undermine confidence in the euro. Some member nations are also concerned about inviting retaliation from Russia.

Belgium, where most of the frozen assets are held at a financial clearing house, is the main opponent of the plan. It fears that Russia will strike back and would prefer that the bloc borrow the money on international markets.

Last week, the Russian Central Bank sued the Belgian clearing house Euroclear in a Moscow court, raising pressure on Belgium and its European partners ahead of the summit.

Hungary and Slovakia oppose von der Leyen’s plan for a “reparations loan.” Some 90 billion euros (USD 105 billion) would be lent to Ukraine until Russia ends its war and pays for the damage it has caused over almost four years. Ukrainian President Volodymyr Zelenskyy says that totals more than 600 billion euros (US$ 700 billion).

The UK, Canada and Norway would fill the gap beyond the 90 billion euros (US$ 105 billion).

Bulgaria, Italy and Malta also remain to be convinced. In recent weeks, EU envoys have worked to flesh out the details and narrow differences among the 27 member countries. If enough countries object, the plan could be blocked. There is no majority support for a plan B of raising the funds on international markets.