According to two diplomats at the ambassadors’ meeting in the POLITICO article POLITICO
Friday’s veto by Hungary on a joint debt raises the stakes in negotiations aimed at persuading Belgium to use frozen Russian assets.
Eurobonds would provide an alternative funding stream for Ukraine, but Budapest rejected the idea of issuing joint debt backed by the EU’s seven-year budget, two diplomats at a meeting of ambassadors told POLITICO.
On Friday, Hungary officially ruled out issuing eurobonds to support Ukraine, depriving the EU of a potential Plan B if it cannot find a way to use frozen Russian state assets to finance Kyiv’s loan of €165 billion.
The European Commission wants the 27 EU member states at the summit later this month to agree to back Kyiv with a loan based on frozen reserves of the Russian central bank. Belgium is resisting strongly, as it holds a large share of these frozen funds and fears Moscow might sue.
EU position and Belgian position
In Brussels, various financing options were discussed: the EU is considering issuing eurobonds as one of two avenues, alongside a reparations loan, to keep Ukraine’s defense budget from being drained already by April.
A few hours before dinner between German Chancellor Friedrich Merz and Belgian Prime Minister Bart De Wever in Brussels, the issue of the reparations loan was under discussion.
“I take the Belgian Prime Minister’s concerns and objections very seriously,” Merz told reporters on Thursday evening. “I want to assure him that the path we are proposing here is the right one.”
– Friedrich Merz
Germany is offering a guarantee of 25 percent of the loan amount to persuade Belgium to provide the frozen Russian funds to Ukraine, but De Wever wants broader guarantees from the entire EU so Belgium is insured for the full amount or even more.
The European Commission proposed issuing eurobonds as one of two options, alongside a reparations loan, to ensure that Ukraine’s military budget is not drained as early as next April.
Raising debt through the EU budget to support Ukraine requires unanimous approval. Hungary’s rejection now raises the stakes in difficult negotiations ahead of the EU leaders’ summit on December 18.
According to sources, the proposed reparations loan would provide €115 billion to finance Ukraine’s defense industry over five years, while €50 billion would go toward Kyiv’s budgetary needs.
The situation underscores the difficulty of negotiations among European countries regarding funding Ukraine amid differing financial interests and strategic priorities.