European Union governments want to agree on Friday to freeze Russian central bank assets immobilised in Europe for as long as necessary, replacing the need for a vote to renew the freeze every six months, EU diplomats said.

The move is the basis for the EU’s plan to use the Russian sovereign assets in the EU for a loan to Ukraine that would keep it financed in 2026 and 2027, allowing the country to continue to defend itself against Russia’s invasion.

The European Commission has proposed using a provision of the EU treaty, Article 122, to keep the assets frozen indefinitely.

ELIMINATE RISK OF VETO

The provision gives EU governments a free hand to adopt whatever measures they see necessary, by qualified majority, to address a difficult economic situation in the EU.

One EU diplomat said the plan was for ambassadors from the bloc’s member states to agree on launching a written procedure to approve the use of Article 122 of the EU treaty “by tomorrow”.

The European Commission said last week that using this legal option was justified in the case of the Ukraine loan to preserve the stability of the economy affected by Russia’s war in Ukraine and the hybrid warfare of Russia against EU countries.

“The (EU) economic situation could be further destabilised if the security context was to further deteriorate, as a result of Russia’s intervention in Ukraine or in the Member States,” the Commission said, arguing that if Ukraine ran out of money and could no longer defend itself, the EU’s economic situation would become much worse still.

An agreement to freeze the Russian assets indefinitely would eliminate a key risk to the plan of using them to finance Ukraine because Moscow-friendly Hungary and Slovakia would no longer have the power to veto an extension of the freeze every six months as now.

While the freeze of the assets would be reviewed annually, the money would stay immobilised until there was no longer “an immediate threat to the economic interests of the union”.

BELGIAN LEGAL WORRIES

Belgium, which holds 185 billion euros of the total 210 billion euros of Russian sovereign assets frozen in Europe, has been sceptical of the Reparations Loan scheme.

One of its worries has been that it would have to refund Moscow if the sanctions were lifted and the money had already been loaned to Ukraine.

However, Belgium is still worried that Russia could launch successful legal action against it for the return of the money.

To address that, EU governments are preparing guarantees for Belgium, under which they would step in to cover their share of the bill in the event of any financial repercussions.

Russia has warned the EU and Belgium against using its assets, which it says would be an act of theft. The Commission says the scheme does not amount to confiscation as the money would be in the form of a loan – although Ukraine would only have to redeem it if Russia pays reparations.

EU leaders will discuss the Reparations Loan at a summit on December 18 and are expected to take a decision on how to finance Ukraine over the next two years.