BRUSSELS — Belgian Prime Minister Bart De Wever on Thursday evening ratcheted up his objections to the European Commission’s plan to use some €140 billion of frozen Russian assets held in Brussels to bolster Ukraine — dashing EU hopes of a breakthrough on mobilizing the assets. De Wever’s intervention — in a strongly-worded letter to European Commission President Ursula von der Leyen and seen by POLITICO — came only hours before the EU executive is expected to issue a proposal addressing Belgium’s concerns on using the funds. The Commission is pushing for the 27 EU member countries to strike a deal at a European Council summit next month so that the billions of Russian reserves held in the Euroclear bank in Belgium can be freed up to support Kyiv with a reparations loan. De Wever is resisting the “fundamentally wrong” scheme over fears Belgium will be on the hook to repay the cash if Russia sues. Hopes had grown in recent days that De Wever could reverse his position if the European Commission were to offer him legal guarantees in the proposal that Belgium would not be financially exposed. But despite increasing diplomatic pressure for Belgium to cave, De Wever on Thursday only increased his hostility to the Commission’s plans. Expanding on his previous objections, the Belgian leader argued the Commission’s scheme would block a peace deal in Ukraine. If the EU’s plan does not come to fruition, the Russian assets will instead be used as a bargaining chip to bring Moscow to the negotiating table, rather than being paid to Kyiv, he said. “Hastily moving forward on the proposed reparations loan scheme would have, as a collateral damage, that we as EU are effectively preventing reaching an eventual peace deal,” De Wever wrote in the letter. After a prolonged standoff, the Commission is expected to finally put forward a formal proposal outlining the loan on Friday, or early next week. After failing to reach a deal in October, EU leaders are set to tackle the most sensitive issues in their next summit in mid-December. While a majority of countries back the loan, De Wever is unconvinced. “In the very probable event Russia is ultimately not officially the losing party, it will, as history has shown in other cases, be legitimately asking for its sovereign assets to be returned,” De Wever continued in the letter. The Belgian leader restated the loan would trigger mayhem in the EU’s financial markets, and expose EU taxpayers to repaying the full amount if the assets are returned to Russia. Instead of tapping the Russian reserves, De Wever suggested that the European Commission should issue €45 billion in joint debt to cover Ukraine’s financial needs in 2026 ― an idea that is unpopular among most EU governments because it involves using taxpayers’ money. Restating his traditional position, the Belgian leader said he would agree to the loan only if governments agree to immediately stump up the full amount if Russia reclaims the assets. “I will not agree unless these guarantees, as stipulated above, are delivered and signed by member states at the time of decision,” he wrote.

BRUSSELS — The European Commission will provide a financial band-aid next year to Baltic nations suffering collateral economic damage from EU sanctions against Russia. The region is being hit particularly hard because of falls in tourism and investment, along with the collapse of cross-border trade. Regions Commissioner Raffaele Fitto is leading the plan, which aims to kickstart the economies of Finland and its Baltic neighbors, according to diplomats and Commission officials who were granted anonymity to speak freely. The intended recipients are also heading to Brussels with a lengthy wish list, hoping Fitto’s plan will reignite their economies. Their concerns will take center stage during a summit of leaders from Eastern European countries in Helsinki on Dec. 16. “We want to have special attention to our region — the eastern flank, including Lithuania — because we see the negative impact coming from the geopolitical situation,” Lithuania’s Europe minister, Sigitas Mitkus, said in an interview with POLITICO earlier this month. “Sometimes it’s difficult to convince [investors] that … we have all the facilities in place.” But skeptics warn that any immediate financial support Fitto can provide will be meager, given the scale of the challenge and with the bloc’s seven-year budget running low. The EU has agreed 19 sanction packages against Moscow in a bid to cripple the Russian war economy, which has bankrolled the Kremlin’s invasion of Ukraine since February 2022. In doing so, Finland, Estonia, Latvia, and Lithuania have all taken a hit. While the threat of a Kremlin invasion has deterred tourists and investors, the sanctions have choked off cross-border trade with Russia, and everything has been made worse by skyrocketing inflation after the pandemic. Dwindling housing prices have also made it more difficult for businesses to provide collateral to secure loans from banks. “People who had cross-border connections with some economic consequences have lost them,” Jürgen Ligi, Estonia’s finance minister, told POLITICO. A native of Tartu on Estonia’s eastern flank, Ligi has witnessed these problems first-hand as he owns a house only four kilometers from the Russian border. “Estonia’s economy has suffered the most from the war [which caused] problems with investments and jobs,” Ligi added. According to the Commission’s latest forecast, Estonia is expected to grow by only 0.6 percent in 2025 — well below the EU average — even though economic activity is expected to pick up in 2026 and 2027. The EU has agreed 19 sanction packages against Moscow in a bid to cripple the Russian war economy, which has bankrolled the Kremlin’s invasion of Ukraine since February 2022. | Sefa Karacan/Getty Images In another sign of financial strain, Finland breached the Commission’s spending rules in 2025 due to excessive spending and an economic slowdown caused by the war. “We will be acknowledging the difficult economic situation Finland is facing, including the geopolitical and the closure of the Russian border,” EU Economy Commissioner Valdis Dombrovskis, said on Tuesday. SCRAPING THE BARREL But Fitto’s options could be limited until the bloc’s new seven-year budget, known as the multi-annual financial framework (MFF), is in place by 2028. “My sense is that the communication won’t come with fresh money but with ideas that can be pursued in the next MFF,” said an EU diplomat who was granted anonymity to discuss upcoming legislation. Mindful of dwindling resources in the EU’s current cash pot, Lithuania’s Mitkus is demanding that Baltic firms get preferential access to the EU’s new funding programs from 2028 — something that is currently lacking in the Commission’s budget proposal from July. Officials from the frontline states are exploring other options. These include Brussels loosening state aid rules so they can subsidize struggling firms, and getting the European Investment Bank to provide guarantees to companies that want to invest in the region. While the upcoming strategy will draw attention to these problems, officials privately admit that it’s unlikely to mobilize enough cash to solve them immediately. “It will build the narrative that in the next MFF you can do something for [pressing issues for Eastern regions such as] drones production,” said the EU diplomat quoted above. But until 2028, “I don’t expect any new money.”

The European Central Bank is hatching a plan to boost the use of the euro around the world, hoping to turn the world’s faltering confidence in U.S. political and financial leadership to Europe’s advantage. Liquidity lines — agreements to lend at short notice to other central banks — have long been a standard part of the crisis-fighting toolkits of central banks, but the ECB is now thinking of repurposing them to further Europe’s political aims, four central bank officials told POLITICO. One aim of the plan is to absorb any shocks if the U.S. — which has backstopped the global financial system with dollars for decades — suddenly decides not to, or attaches unacceptable conditions to its support. The other goal is to underpin its foreign trade more actively and, ultimately, grab some of the benefits that the U.S. has historically enjoyed from controlling the world’s reserve currency. Officials were granted anonymity because the discussions are private. Bruegel fellow Francesco Papadia, who was previously director-general for the ECB’s market operations, told POLITICO that such efforts are sensible and reflect an increasing willingness among European authorities to see the euro used more widely around the world. WHAT’S A LIQUIDITY LINE? Central banks typically use two types of facilities to lend to each other: either by swapping one currency for another (swap lines) or by providing funds against collateral denominated in the lender’s currency (repo lines). The ECB currently maintains standing, unlimited swap lines with the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the Swiss National Bank, and the Bank of Japan, as well as standing but capped lines with the Danish and Swedish central banks. It also operates a facility with the People’s Bank of China, capped in both volume and duration. Other central banks seeking euro liquidity must rely on repo lines known as EUREP, under which they can borrow limited amounts of euros for a limited period against high-quality euro-denominated collateral. At present, only Hungary, Romania, Albania, Andorra, San Marino, North Macedonia, Montenegro and Kosovo have such lines in place. But these active lines have sat untouched since Jan. 2, 2024 — and even at the height of the Covid crisis, their use peaked at a mere €3.6 billion. For the eurozone’s international partners, the knowledge that they can access the euro in times of stress is valuable in itself, helping to pre-empt self-fulfilling fears of financial instability. But some say that if structured generously enough, the facilities can also reduce concerns about exchange rate fluctuations or liquidity shortages. Such details may sound academic, but the availability of liquidity lines has real impacts on business: A Romanian carmaker whose bank has trouble securing euros may fail to make payments to a supplier in Germany, disrupting its production and raising its costs.  “The knowledge that foreign commercial banks can borrow in euros while being assured that they have access to euro liquidity [as a backstop] encourages the use of the euro,” one ECB rate-setter explained.  French central bank chief François Villeroy de Galhau suggested that Europe could at least take a leaf out of China’s book, noting that the Eurosystem “can make euro invoicing more attractive” by expanding the provision of euro liquidity lines. | Kirill Kudryavtsev/Getty Images “Liquidity lines, in particular EUREP, should be flexible, simple and easy to activate,” he argued. One option, he said, would be to extend them to more countries. Another could be to make EUREP a standing facility — removing any doubts about whether, and under what conditions, euro access would be granted. Papadia added that the ECB could also ease access to EUREP by cutting its cost, boosting available volumes or extending the timeframe for use. NOT JUST AN ACADEMIC QUESTION French central bank chief François Villeroy de Galhau suggested in a recent speech that Europe could at least take a leaf out of China’s book, noting that the Eurosystem “can make euro invoicing more attractive” by expanding the provision of euro liquidity lines. China has established around 40 swap lines with trading partners worldwide to underpin its burgeoning foreign trade, especially with poorer and less stable countries. By contrast, the ECB — a historically cautious animal — “is not marketing the euro to the same extent that the Chinese market the renminbi,” according to Papadia.  Another policymaker told POLITICO that while there is a broad consensus that liquidity lines should be made more widely available, the Governing Council had not yet hashed out the details. Austrian National Bank Governor Martin Kocher told POLITICO in a recent interview that there has been “no deeper discussion” on the Council, adding that he sees no reason to promote euro liquidity lines actively. “I’m not arguing that you should incentivize or create a demand. Rather, if there is demand, we should be prepared for it,” he said, acknowledging that “preparation is very important.” He noted that erratic U.S. policies could force the euro “to take on a stronger role in the international sphere” — both as a reserve currency and in transactions. According to a Reuters report earlier this month, similar concerns among central banks worldwide have sparked a debate over creating an alternative to Federal Reserve funding backstops by pooling their own dollar reserves. The ECB declined to comment for this article. RISK AVERSION AND OTHER OBSTACLES  However, swap lines in particular don’t come without risks. “The main risk is that the country would use a swap and then would not be able to return the drawn euros,” said Papadia. “And then you will be left with foreign currency you don’t really know what to do with.” That is exactly the kind of trap some economists warn the U.S. is stumbling into with its $20 billion swap line to Argentina. “The United States doesn’t really want Argentina’s currency,” the Council on Foreign Relations’ Brad Setser wrote in a blog post. “It expects to be repaid in dollars, so it would be a massive failure if the swap was never unwound and the U.S. Treasury was left holding a slug of pesos.” Austrian National Bank Governor Martin Kocher said there has been “no deeper discussion” on the Council, adding that he sees no reason to promote euro liquidity lines actively. | Heinz-Peter Bader/Getty Images Such thinking, another central bank official said, will incline the ECB to focus first on reforming the EUREP lines, which have always been its preferred tool. The trouble with that, however, is that EUREP use may be limited by a lack of safe assets denominated in euros to serve as collateral. Papadia noted that the Fed’s network of liquidity lines works because “the Fed has the U.S.  Treasury as a kind of partner in granting these swaps.” So long as Europe fails to create a joint debt instrument, this may put a natural cap on such lines.  Even with a safe asset, focusing on liquidity lines first could be putting the cart before the horse, said Gianluca Benigno, professor of economics at the University of Lausanne and former head of the New York Fed’s international research department. Europe’s diminishing geopolitical relevance means that the ECB is unlikely to see much demand — deliberately engineered or not — for its liquidity outside Europe without much broader changes, Benigno told POLITICO. Liquidity lines can be used to advance your goals if you already have power — but they can’t create it. For that, he argued, Europe first needs a clear political vision for its role in the global economy, alongside a Capital Markets Union and the creation of a common European safe asset — issues that only politicians can address.

EINDHOVEN, The Netherlands — “You don’t see me lash out against other parties that often.” Henri Bontenbal, leader of the center-right Dutch Christian Democratic Appeal, has just finished a two-hour event at the High Tech Campus in Eindhoven when reporters asked why he avoids sparring with far-right leader Geert Wilders ahead of this month’s national elections. Bontenbal, a former energy consultant and a relative newcomer to politics, is sitting on the stage where he has nerdily lectured an audience about the importance of collaboration and trust in the political realm. “Other parties occasionally give us a slap,” he admits. “But we continue to tell our own story.”  Bontenbal entered the political arena in an era defined by characters such as Wilders and Donald Trump. It’s also a time when politicians continuously attack each other and make outlandish claims in a snackable format on social media. But Bontenbal has taken a different approach. “Bontenbal is in many views the anti-populist,” wrote Simon Van Teutem, a Dutch columnist at news site The Correspondent, in a September profile. The approach is fitting for the 42-year-old, raised as one of eight in a Protestant family in Rotterdam, who takes pride in sharing that he still reads the Bible daily. After two chaotic years, Bontenbal’s message of decency, stability and trust is suddenly resonating with voters.  Dutch voters head back to the polling booths on Oct. 29, after the last government fell barely a year into office. The CDA is neck and neck for second in the polls alongside a joint Socialist-Greens ticket, at around 24 seats, behind Wilders’ far-right PVV at 31 seats. That’s set to make the party one of the election’s big winners and Bontenbal a potential kingmaker in government negotiations. Bontenbal’s political career began unexpectedly in 2021, when he became a temporary member of parliament, filling in for the illustrious former politician Pieter Omtzigt. In the November 2023 elections, CDA’s support crumbled to five seats shortly after Bontenbal had taken over — in part because of the success of Omtzigt’s new rival party. Back then, Bontenbal’s leadership of the center-right seemed doomed. Fast forward two years and the mood in Eindhoven, a breeding ground for top companies including ASML and Philips, is bright. The venue in the Netherlands’ “smartest square km” is packed for an event in honor of a local candidate. But Bontenbal — known to voters as Henri — is top of the ticket. Beer mats read “Henri, one more round?” On the tables are copies of his new book, It Really Can Be Different. On stage in Eindhoven, Botenbal lists four priorities for the election, “which we all know are top of the list”: housing shortages, how to handle asylum seekers, the country’s nitrogen crisis and investments in the economy of the future.  He also doubles down on the Netherlands’ longing for political calm, as the country nears the third election in under five years. He champions “stability,” “decency,” and “trust” and wears being boring as a badge of pride.  Addressing a venue packed with entrepreneurs, he promises them a “reliable government” and a long-term investment agenda. “If I speak to entrepreneurs, the first they ask for is not to lower taxes, but what they ask for is: can you please keep things stable in the next few years?” Bontenbal’s spiel is geared toward welcoming the centrist Christian Democratic voters back, as much through style as substance. “The country is longing for a stable government,” he told a candidates’ TV debate Thursday — adding that while Wilders is “the best megaphone for dissatisfaction and anger,” he feels that politicians can do better. “Politics is not a theatre, not a circus,” Bontenbal told the talk show RTL Tonight recently after an analyst said that TV viewers had perceived him as decent yet boring in the first televised debate.  “I’m not ordered to be the funniest or to make the craziest remarks,” Bontenbal added. Being boring is a quality, the analyst agreed.