BRUSSELS — Belgium on Monday pushed back against the European Commission’s proposed concessions to unblock a €210 billion loan to Ukraine funded by frozen Russian assets — dashing EU hopes of securing a deal in time for Thursday’s leaders’ summit. With two days to go, the Commission is making a last push to convince EU member countries to back the loan so that billions of euros in Russian reserves held at the Euroclear bank in Brussels can be freed up to support Kyiv’s war-battered economy. The EU’s 27 envoys will continue discussions on the scheme later Tuesday, as talks to end Russia’s almost four-year all-out war in Ukraine achieved some progress during a meeting of Western leaders and U.S. envoys in Berlin on Monday. After days of negotiations on the assets, the Commission on Monday suggested legal changes to its proposal to secure political buy-in from Belgium. It gave legal assurances that, under any scenario, Belgium could tap into as much as €210 billion if it faces legal claims or retaliation by Russia, according to the latest text seen by POLITICO. It also stated that no money should be given to Ukraine before EU countries provide financial guarantees covering at least 50 percent of the payout. In a further concession, the Commission instructed all EU countries to end their bilateral investment treaties with Russia to ensure Belgium isn’t left alone to deal with retaliation from Moscow. But Belgium said that the reassurances were not enough during a meeting of EU ambassadors on Monday evening, four EU diplomats told POLITICO. “There will be no deal until EUCO [European Council],” said an EU diplomat who, like others quoted in this article, was granted anonymity to speak freely. The Belgian government is holding out against using the Russian assets over fears that it will be on the hook to repay the full amount if Russia attempts to claw back the money. But in a further complication, four other countries — Italy, Malta, Bulgaria and Czechia — backed Belgium’s demand to explore alternative financing for Ukraine, such as joint debt. While France continues to publicly back the frozen assets plan — the country’s Europe Minister Benjamin Haddad said in Brussels on Tuesday that Paris supports it — a person close to French President Emmanuel Macron said Paris was “neutral” on whether Europe should tap Moscow’s billions, or turn to Eurobonds to keep Ukraine from going bankrupt. Supporters of the scheme — such as Germany — insist there is no real alternative to using the Russian assets. They say that joint debt isn’t feasible because it requires unanimity — meaning that Hungary’s Prime Minister Viktor Orbán, who has long been skeptical of support for Ukraine, could block the initiative. “Let us not deceive ourselves. If we do not succeed in this, the European Union’s ability to act will be severely damaged for years, if not for a longer period,” German Chancellor Friedrich Merz said Monday. But that isn’t convincing for all EU countries. Critics claim that Germany insists on using Russian assets because it is ideologically opposed to EU common debt. “The narrative is that Hungary is against common debt [for Ukraine]. The reality is that the frugals are against common debt,” said an EU diplomat. Clea Caulcutt contributed to this report from Paris.

BRUSSELS — Italy is throwing its weight behind Belgium in opposing the EU’s plan to send €210 billion of Russia’s frozen state assets to Ukraine, according to an internal document seen by POLITICO. The intervention by Rome, the EU’s No.3 in terms of population and voting power — less than a week before a crucial meeting of EU leaders in Brussels — undermines the European Commission’s hopes of finalizing a deal on the plan. The Commission is pushing for EU member countries to reach an agreement in a European Council summit on Dec.18-19 so that the billions of euros in Russian reserves held in the Euroclear bank in Belgium can be freed up to support Kyiv’s war-battered economy.  Belgium’s government is holding out over fears it will be on the hook to repay the full amount if Russia claws back the money, but has so far lacked a heavyweight ally ahead of the December summit. Now Italy has shaken up the diplomatic dynamics by drafting a document with Belgium, Malta and Bulgaria urging the Commission to explore alternative options to using the Russian assets to keep Ukraine afloat over the coming years. The four countries said they “invite the Commission and the Council to continue exploring and discussing alternative options in line with EU and international law, with predictable parameters, presenting significantly less risks, to address Ukraine’s financial needs, based on an EU loan facility or bridge solutions.” The four countries are referring to a Plan B to issue joint EU debt to finance Ukraine over the coming years. However, this idea has its own problems. Critics note it will add to the high debt burdens of Italy and France, and requires unanimity — meaning it can be vetoed by Hungary’s Kremlin-friendly Prime Minister Viktor Orbán. The four countries — even if joined by pro-Kremlin Hungary and Slovakia — would not be able to build a blocking minority but their public criticism erodes the Commission’s hopes of striking a political deal next week. While Italy’s right-wing Prime Minister Giorgia Meloni has always supported sanctions against Russia, the government coalition she leads is divided over supporting Ukraine. Hard-right Deputy Prime Minister Matteo Salvini has embraced a Russia-friendly stance and endorsed U.S. President Donald Trump’s plan to end the war in Ukraine. EMERGENCY RULE Offering a further criticism, the four countries expressed skepticism toward the Commission seizing on emergency powers to overhaul the current sanctions rules and keep Russia’s assets frozen in the long-term. Despite voting in favor of this move to preserve EU unity, they said they were wary of then progressing to use the Russian assets themselves. “This vote does not pre-empt in any circumstances the decision on the possible use of Russian immobilised assets that needs to be taken at Leaders’ level,” the four countries wrote. The legal mechanism for long-term freeze is meant to reduce the chance that pro-Kremlin countries in Europe, such as Hungary and Slovakia, will hand back the frozen funds to Russia. Officials claim this workaround undermines the Kremlin’s chances of liberating its assets as part of a post-war peace settlement — and therefore strengthens the EU’s separate plan to make use of that money.   However, the four countries wrote that the legal clause “implies very far reaching legal, financial, procedural, and institutional consequences that might go well beyond this specific case.”

Russia’s central bank on Friday filed a lawsuit in Moscow against Brussels-based Euroclear, which houses most of the frozen Russian assets that the EU wants to use to finance aid to Ukraine. The court filing comes just days before a high-stakes European Council summit, where EU leaders are expected to press Belgium to unlock billions of euros in Russian assets to underpin a major loan package for Kyiv.   “Due to the unlawful actions of the Euroclear depository that are causing losses to the Bank of Russia, and in light of mechanisms officially under consideration by the European Commission for the direct or indirect use of the Bank of Russia’s assets without its consent, the Bank of Russia is filing a claim in the Moscow Arbitration Court against the Euroclear depository to recover the losses incurred,” the central bank said in a statement. Belgium has opposed the use of sovereign Russian assets over concerns that the country may eventually be required to pay the money back to Moscow on its own. Some €185 billion in frozen Russian assets are under the stewardship of Euroclear, the Brussels-based financial depository, while another €25 billion is scattered across the EU in private bank accounts. With the future of the prospective loan still hanging in the air, EU ambassadors on Thursday handed emergency powers to the European Commission to keep Russian state assets permanently frozen. Such a solution would mean the assets remain blocked until the Kremlin pays post-war reparations to Ukraine, significantly reducing the possibility that pro-Russian countries like Hungary or Slovakia would hand back the frozen funds to Russia. While Russian courts have little power to force the handover of Euroclear’s euro or dollar assets held in Belgium, they do have the power to take retaliatory action against Euroclear balances held in Russian financial institutions. However, in 2024 the European Commission introduced a legal mechanism to compensate Euroclear for losses incurred in Russia due to its compliance with Western sanctions — effectively neutralizing the economic effects of Russia’s retaliation. Euroclear declined to comment.

BRUSSELS — European banks and other finance firms should decrease their reliance on American tech companies for digital services, a top national supervisor has said. In an interview with POLITICO, Steven Maijoor, the Dutch central bank’s chair of supervision, said the “small number of suppliers” providing digital services to many European finance companies can pose a “concentration risk.” “If one of those suppliers is not able to supply, you can have major operational problems,” Maijoor said. The intervention comes as Europe’s politicians and industries grapple with the continent’s near-total dependence on U.S. technology for digital services ranging from cloud computing to software. The dominance of American companies has come into sharp focus following a decline in transatlantic relations under U.S. President Donald Trump. While the market for European tech services isn’t nearly as developed as in the U.S. — making it difficult for banks to switch — the continent “should start to try to develop this European environment” for financial stability and the sake of its economic success, Maijoor said. European banks being locked in to contracts with U.S. providers “will ultimately also affect their competitiveness,” Maijoor said. Dutch supervisors recently authored a report on the systemic risks posed by tech dependence in finance. Dutch lender Amsterdam Trade Bank collapsed in 2023 after its parent company was placed on the U.S. sanctions list and its American IT provider withdrew online data storage services, in one of the sharpest examples of the impact on companies that see their tech withdrawn. Similarly a 2024 outage of American cybersecurity company CrowdStrike highlighted the European finance sector’s vulnerabilities to operational risks from tech providers, the EU’s banking watchdog said in a post-mortem on the outage. In his intervention, Maijoor pointed to an EU law governing the operational reliability of banks — the Digital Operational Resilience Act (DORA) — as one factor that may be worsening the problem. Those rules govern finance firms’ outsourcing of IT functions such as cloud provision, and designate a list of “critical” tech service providers subject to extra oversight, including Amazon Web Services, Google Cloud, Microsoft and Oracle. DORA, and other EU financial regulation, may be “inadvertently nudging financial institutions towards the largest digital service suppliers,” which wouldn’t be European, Maijoor said. “If you simply look at quality, reliability, security … there’s a very big chance that you will end up with the largest digital service suppliers from outside Europe,” he said. The bloc could reassess the regulatory approach to beat the risks, Maijoor said. “DORA currently is an oversight approach, which is not as strong in terms of requirements and enforcement options as regular supervision,” he said. The Dutch supervisors are pushing for changes, writing that they are examining whether financial regulation and supervision in the EU creates barriers to choosing European IT providers, and that identified issues “may prompt policy initiatives in the European context.” They are asking EU governments and supervisors “to evaluate whether DORA sufficiently enhances resilience to geopolitical risks and, if not, to consider issuing further guidance,” adding they “see opportunities to strengthen DORA as needed,” including through more enforcement and more explicit requirements around managing geopolitical risks. Europe could also set up a cloud watchdog across industries to mitigate the risks of dependence on U.S. tech service providers, which are “also very important for other parts of the economy like energy and telecoms,” Maijoor said. “Wouldn’t there be a case for supervision more generally of these hyperscalers, cloud service providers, as they are so important for major parts of the economy?” The European Commission declined to respond.

ATHENS — The country that almost got kicked out of the eurozone is now running the powerful EU body that rescued it from bankruptcy. Greece’s finance minister, Kyriakos Pierrakakis, on Thursday beat Belgian Deputy Prime Minister Vincent Van Peteghem in a two-horse race for the Eurogroup presidency. Although an informal forum for eurozone finance ministers, the post has proved pivotal in overcoming crises — notably the sovereign debt crisis, which resulted in three bailouts of the Greek government. That was 10 years ago, when Pierrakakis’ predecessor described the Eurogroup as a place fit only for psychopaths. Today, Athens presents itself as a poster child of fiscal prudence after dramatically reducing its debt pile to around 147 percent of its economic output — albeit still the highest tally in the eurozone. “My generation was shaped by an existential crisis that revealed the power of resilience, the cost of complacency, the necessity of reform, and the strategic importance of European solidarity,” Pierrakakis wrote in his motivational letter for the job. “Our story is not only national; it is deeply European.” Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. Belgium’s Van Peteghem could boast more experience and held a great deal of respect within the eurozone, setting him up as the early favorite to win. But Belgium’s continued reluctance to back the European Commission’s bid to use the cash value of frozen Russian assets to finance a €165 billion reparations loan to Ukraine ultimately contributed to Van Peteghem’s defeat. NOT TYPICAL Pierrakakis isn’t a typical member of the center-right ruling New Democracy party, which belongs to the European People’s Party. His political background is a socialist one, having served as an advisor to the centre-left PASOK party from 2009, when Greece plunged into financial crisis. He was even one of the Greek technocrats negotiating with the country’s creditors. The Harvard and MIT graduate joined New Democracy to support Prime Minister Kyriakos Mitsotakis’ bid for the party leadership in 2015, because he felt that they shared a political vision. Pierrakakis got his big political break when New Democracy won the national election in 2019, after four years of serving as a director of the research and policy institute diaNEOsis. He was named minister of digital governance, overseeing Greece’s efforts to modernize the country’s creaking bureaucracy, adopting digital solutions for everything from Cabinet meetings to medical prescriptions. Those efforts made him one of the most popular ministers in the Greek cabinet — so much so that Pierrakakis is often touted as Mitsotakis’ likely successor for the party leadership in the Greek press. Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. | Nicolas Economou/Getty Images After the re-election of New Democracy in 2023, Pierrakakis took over the Education Ministry, where he backed controversial legislation that paved the way for the establishment of private universities in Greece. A Cabinet reshuffle in March placed him within the finance ministry, where he has sped up plans to pay down Greece’s debt to creditors and pledged to bring the country’s debt below 120 percent of GDP before 2030.

The discussion surrounding the digital euro is strategically important to Europe. On Dec. 12, the EU finance ministers are aiming to agree on a general approach regarding the dossier. This sets out the European Council’s official position and thus represents a major political milestone for the European Council ahead of the trilogue negotiations. We want to be sure that, in this process, the project will be subject to critical analysis that is objective and nuanced and takes account of the long-term interests of Europe and its people. > We do not want the debate to fundamentally call the digital euro into question > but rather to refine the specific details in such a way that opportunities can > be seized. We regard the following points as particularly important: * maintaining European sovereignty at the customer interface; * avoiding a parallel infrastructure that inhibits innovation; and * safeguarding the stability of the financial markets by imposing clear holding limits. We do not want the debate to fundamentally call the digital euro into question but rather to refine the specific details in such a way that opportunities can be seized and, at the same time, risks can be avoided. Opportunities of the digital euro:  1. European resilience and sovereignty in payments processing: as a public-sector means of payment that is accepted across Europe, the digital euro can reduce reliance on non-European card systems and big-tech wallets, provided that a firmly European design is adopted and it is embedded in the existing structures of banks and savings banks and can thus be directly linked to customers’ existing accounts. 2. Supplement to cash and private-sector digital payments: as a central bank digital currency, the digital euro can offer an additional, state-backed payment option, especially when it is held in a digital wallet and can also be used for e-commerce use cases (a compromise proposed by the European Parliament’s main rapporteur for the digital euro, Fernando Navarrete). This would further strengthen people’s freedom of choice in the payment sphere. 3. Catalyst for innovation in the European market: if integrated into banking apps and designed in accordance with the compromises proposed by Navarrete (see point 2), the digital euro can promote innovation in retail payments, support new European payment ecosystems, and simplify cross-border payments. > The burden of investment and the risk resulting from introducing the digital > euro will be disproportionately borne by banks and savings banks. Risks of the current configuration: 1. Risk of creating a gateway for US providers: in the configuration currently planned, the digital euro provides US and other non-European tech and payment companies with access to the customer interface, customer data and payment infrastructure without any of the regulatory obligations and costs that only European providers face. This goes against the objective of digital sovereignty. 2. State parallel infrastructures weaken the market and innovation: the European Central Bank (ECB) is planning not just two new sets of infrastructure but also its own product for end customers (through an app). An administrative body has neither the market experience nor the customer access that banks and payment providers do. At the same time, the ECB is removing the tried-and-tested allocation of roles between the central bank and private sector. Furthermore, the Eurosystem’s digital euro project will tie up urgently required development capacity for many years and thereby further exacerbate Europe’s competitive disadvantage. The burden of investment and the risk resulting from introducing the digital euro will be disproportionately borne by banks and savings banks. In any case, the banks and savings banks have already developed a European market solution, Wero, which is currently coming onto the market. The digital euro needs to strengthen rather than weaken this European-led payment method. 3. Risks for financial stability and lending: without clear holding limits, there is a risk of uncontrolled transfers of deposits from banks and savings banks into holdings of digital euros. Deposits are the backbone of lending; large-scale outflows would weaken both the funding of the real economy – especially small and medium-sized enterprises – and the stability of the system. Holding limits must therefore be based on usual payment needs and be subject to binding regulations. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany * The ultimate controlling entity is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany More information here.

BRUSSELS ― Europe’s strategy for convincing the Belgians to support its plan to fund Ukraine? Warn them they could be treated like Hungary. At their summit on Dec. 18, EU leaders’ key task will be to win over Bart De Wever, the bloc’s latest bête noire. Belgium’s prime minister is vetoing their efforts to pull together a €210 billion loan to Ukraine as it faces a huge financial black hole and as the war with Russian grinds on. De Wever has dug his heels in for so long over the plan to fund the loan using frozen Russian assets ― which just happen to be mostly housed in Belgium ― that diplomats from across the bloc are now working on strategies to get him on board. De Wever is holding out over fears Belgium will be on the hook should the money need to be paid back, and has now asked for more safety nets. Nearly all the Russian assets are housed in Euroclear, a financial depository in Brussels. He wants the EU to provide an extra cash buffer on top of financial guarantees and increased safeguards to cover potential legal disputes and settlements — an idea many governments oppose. Belgium has sent a list of amendments it wants, to ensure it isn’t forced to repay the money to Moscow alone if sanctions are lifted. De Wever said he won’t back the reparations loan if his concerns aren’t met. Leaders thought they’d have a deal the last time they all met in October. Then, it was unthinkable they wouldn’t get one in December. Now it looks odds-on. All hope isn’t lost yet, diplomats say. Ambassadors will go line by line through Belgium’s requests, figure out the biggest concerns and seek to address them. There’s still room for maneuver. The plan is to come as close to the Belgian position as they can. But a week before leaders meet, the EU is turning the screws. If De Wever continues to block the plan ― a path he’s been on for several months, putting forward additional conditions and demands ― he will find himself in an uncomfortable and remarkable position for the leader of a country that for so long has been pro-EU, according to an EU diplomat with knowledge of the discussions taking place. The Belgium leader would be frozen out and ignored, just like Hungary’s Viktor Orbán has been given the cold shoulder over democratic backsliding and his refusal to play ball on sanctioning Russia. The message to Belgium is that if it does not come on board, its diplomats, ministers and leaders will lose their voice around the EU table. Officials would put to the bottom of the pile Belgium’s wishlist and concerns related to the EU’s long-term budget for 2028–2034, which would cause the government a major headache, particularly when negotiations get into the crucial final stretch in 18 months’ time. Nearly all the Russian assets are housed in Euroclear, a financial depository in Brussels. | Ansgar Haase/Getty Images Its views on EU proposals will not be sought. Its phone calls will go unanswered, the diplomat said. It would be a harsh reality for a country that is both literally and symbolically at the heart of the EU project, and that has punched above its weight when it comes to taking on leading roles such as the presidency of the European Council. But diplomats say desperate times call for desperate measures. Ukraine faces a budget shortfall next year of €71.7 billion, and will have to start cutting public spending from April unless it can secure the money. U.S. President Donald Trump has again distanced himself from providing American support. Underscoring the high stakes, EU ambassadors are meeting three times this week — on Wednesday, Friday and Sunday — for talks on the Commission’s proposal for the loan, published last week.   PLAN B — AND PLAN C — FOR UKRAINE The European Commission put forward one other option for funding Ukraine: joint debt backed by the EU’s next seven-year budget. Hungary has formally ruled out issuing eurobonds, and raising debt through the EU budget to prop up Ukraine requires a unanimous vote. That leaves a Plan C: for some countries to dig into their own treasuries to keep Ukraine afloat. That prospect isn’t among the Commission’s proposals, but diplomats are quietly discussing it. Germany, the Nordics and the Baltics are seen as the most likely participants. But those floating the idea have a warning: The most significant benefit conferred by EU membership to countries around the bloc is solidarity. By forcing some member countries to carry the financial burden of supporting Ukraine alone, the bloc risks a serious split at its core. Germany in future may not choose to prop up a failing bank in a country that doesn’t stump up the cash for Kyiv now, the thinking goes. “Solidarity is a two-way street,” a diplomat said. For sure, there is another way — but only in theory. De Wever’s fellow EU leaders could band together and pass the “reparation loan” plan via so-called qualified majority voting, ignoring Belgium’s rejections and just steamrollering it through. But diplomats said this is not being seriously considered. Bjarke Smith-Meyer and Gregorio Sorgi contributed reporting.

BRUSSELS — Belgium is demanding that the EU provide an extra cash buffer to ensure against Kremlin threats over a €210 billion loan to Ukraine using Russian assets, according to documents obtained by POLITICO. The cash buffer is part of a series of changes that the Belgian government wants to make to the European Commission’s proposal, which would be financed by leveraging €185 billion of frozen Russian state assets held by the Brussels-based financial depository Euroclear. The remaining €25 billion would come from other frozen Russian assets, lying in private bank accounts across the bloc — predominantly in France. Belgium’s fresh demand is designed to give Euroclear more financial firepower to withstand Russian retaliation. This cash buffer would come on top of financial guarantees that EU countries would provide against the €210 billion loan to protect Belgium from paying back the full amount if the Kremlin claws back the money. In its list of amendments to the Commission, Belgium even suggested increasing the guarantees to cover potential legal disputes and settlements — an idea that is opposed by many governments. Belgium’s demands come as EU leaders prepare to descend on Brussels on Dec. 18 to try and secure Ukraine’s ability to finance its defences against Russia. As things stand, Kyiv’s war chest will run bare in April. Failure to use the Russian assets to finance the loan would force EU capitals to reach into their own pockets to keep Ukraine afloat. But frugal countries are politically opposed to shifting the burden to EU taxpayers. Belgium is the main holdout over financing Ukraine using the Russian assets, amid fears that it will be on the hook to repay the full amount if Moscow manages to claw its money back. The bulk of this revenue is currently being funneled to Ukraine to pay down a €45 billion loan from G7 countries, with Euroclear retaining a 10 percent buffer to cover legal risks. | Artur Widak/Getty Images In its list of suggested changes, Belgium asked the EU to set aside an unspecified amount of money to protect Euroclear from the risk of Russian retaliation. It said that the safety net will account for “increased costs which Euroclear might suffer (e.g. legal costs to defend against retaliation)” and compensate for lost revenue. According to the document, the extra cash buffer should be financed by the windfall profits that Euroclear collects in interest from a deposit account at the European Central Bank, where the Kremlin-sanctioned money is currently sitting. The proceeds amounted to €4 billion last year. The bulk of this revenue is currently being funneled to Ukraine to pay down a €45 billion loan from G7 countries, with Euroclear retaining a 10 percent buffer to cover legal risks. In order to better protect Euroclear, Belgium wants to raise this threshold over the coming years.

BRUSSELS — France and Italy can breathe a sigh of relief after the EU’s statistics office signaled that the financial guarantees needed to back a €210 billion financing package to Ukraine won’t increase their heavy debt burdens. Eurostat on Tuesday evening sent a letter, obtained by POLITICO, informing the bloc’s treasuries that the financial guarantees underpinning the loan, backed by frozen Russian state assets on Belgian soil, would be considered “contingent liabilities.” In other words, the guarantees would only impact countries’ debt piles if triggered. Paris and Rome wanted Eurostat to clarify how the guarantees would be treated under EU rules for public spending, as both countries carry a debt burden above 100 percent of their respective economic output. Eurostat’s letter is expected to allay fears that signing up to the loan would undermine investor confidence in highly indebted countries and potentially raise their borrowing costs. That’s key for the Italians and French, as EU leaders prepare to discuss the initiative at a summit next week. Failure to secure a deal could leave Ukraine without enough funds to keep Russian forces at bay next year. The Commission has suggested all EU countries share the risk by providing financial guarantees against the loan in case the Kremlin manages to claw back its sanctioned cash, which is held in the Brussels-based financial depository Euroclear. “None of the conditions” that would lead to EU liability being transferred to member states “would be met,” Eurostat wrote in a letter, adding that the chances of EU countries ever paying those guarantees are weak. The Commission instead will be held liable for those guarantees, the agency added. Germany is set to bear the brunt of the loan, guaranteeing some €52 billion under the Commission’s draft rules. This figure will likely rise as Hungary has already refused to take part in the funding drive for Ukraine. The letter is unlikely to change Belgium’s stance, as it wants much higher guarantees and greater legal safeguards against Russian retaliation at home and abroad. The biggest risk facing the Commission’s proposal is the prospect of the assets being unfrozen if pro-Russia countries refuse to keep existing sanctions in place. Under current rules, the EU must unanimously reauthorize the sanctions every six months. That means Kremlin-friendly countries, such as Hungary and Slovakia, can force the EU to release the sanctioned money with a simple no vote. To make this scenario more unlikely, the Commission suggested a controversial legal fix that will be discussed today by EU ambassadors. Eurostat described the possibility of EU countries paying out for the loan as “a complex event with no obvious probability assessment at the time of inception.”

BRUSSELS — Japan has rebuffed the EU’s offer to join its plan to use frozen Russian state assets to fund Ukraine — dashing the bloc’s hopes of securing global support for the initiative. During a meeting of G7 finance ministers on Monday, Tokyo poured cold water on a request by Brussels to copy its plans to send Ukraine the cash value of Russian sovereign assets held in Belgian bank Euroclear. Japan signaled it is unable to use around $30 billion worth of Russian frozen assets held on its soil to issue a loan to Ukraine, two EU diplomats briefed on the discussions told POLITICO. The European Commission wants EU capitals to strike a deal on using up to €210 billion in sanctioned cash before a leaders’ summit on Dec. 18. Belgium, however, is resisting over fears it will be on the hook to repay the full amount if Russia claws back the money. One of its demands is that other G7 countries beyond the EU issue a loan to Ukraine using the Russian frozen assets that they hold domestically. Belgian Prime Minister Bart De Wever has insisted that greater participation by G7 allies will reduce the risk of Russia retaliating solely against Belgium.   However, the U.S. and Japan have refused to join Brussels’ scheme — leaving the EU to bear the brunt of Ukraine’s future financing needs alone. During the meeting, the U.S. said it will cut support to Ukraine after disbursing the last installments of a G7-wide loan that was negotiated by the Biden administration in 2024, an EU diplomat said. The war-battered country faces a budget shortfall of €71.7 billion next year and will have to start cutting public spending from April unless fresh money arrives.  “We will continue to work together to develop a wide range of financing options to support Ukraine, including potentially using the full value of the Russian Sovereign Assets, immobilized in our jurisdictions until reparations are paid for by Russia,” finance ministers from G7 countries wrote in their joint statement after the meeting. But in a note of caution they added that “our action will remain consistent with our respective legal frameworks.” Japanese Finance Minister Satsuki Katayama has ruled out using the Russian assets due to legal concerns, said an EU diplomat who was briefed on the meeting. However, several officials said Japan’s stance was linked to U.S. opposition to using the Russian assets for Ukraine, arguing Tokyo doesn’t want to flout its crucial ally. Like the EU diplomats, they were allowed to remain anonymous to discuss sensitive matters. U.S. President Donald Trump has signaled he intends to use the Russian assets to bring President Vladimir Putin to the negotiating table. Instead of sending the money to Kyiv, Washington has suggested handing part of the assets back to Russia and using the remainder to finance U.S. investments in Ukraine. But European Commission President Ursula von der Leyen continued to support the idea of using the Russian assets to help Ukraine during a meeting on Monday with the country’s president, Volodymyr Zelenskyy. “Our Reparations Loan proposal is complex but at its core, it increases the cost of war for Russia,” von der Leyen wrote in a statement after the meeting, in which she was joined by British Prime Minister Keir Starmer, French President Emmanuel Macron and German Chancellor Friedrich Merz. “So the longer Putin wages his war, spills blood, takes lives, and destroys Ukrainian infrastructure — the higher the costs for Russia will be.” In a boost for von der Leyen, the U.K. and Canada have signaled openness to handing over the Russian state assets held on their soil to Ukraine — provided the EU’s plan comes to fruition. This issue is expected to take center stage during a meeting on Friday between Starmer and De Wever.