File photo for representational purpose.
Credit: Reuters photo
Brussels: The European Union looked set on Friday to indefinitely freeze Russian central bank assets held in Europe, removing a big obstacle to using the cash to help Ukraine defend itself against Moscow's invasion.
EU governments aim to sign off by 1600 GMT, through a qualified majority vote, on a plan to immobilise 210 billion euros (246 billion dollars) worth of Russian sovereign assets for as long as needed to prevent major economic disruption to the EU economy.
A qualified majority among EU governments means the support of at least 15 of the 27 member states representing 65% of the EU population.
The new freeze, which would stay in place "until there is no longer an immediate threat to the economic interests of the Union", will replace the current system which requires a roll-over of the freeze every six months by unanimity.
This will remove the risk that Hungary and Slovakia, which have better relations with Moscow than other EU states, could refuse to roll over the freeze at some point forcing the EU to return the money to Russia.
Planned loan to Ukraine
The indefinite asset freeze is meant to help convince Belgium to support the EU's plan to use the frozen Russian cash to extend a loan of up to 165 billion euros to Ukraine to cover its military and civilian budget needs in 2026 and 2027.
The loan would be paid back by Ukraine only when Russia pays Kyiv war damages, making the loan effectively a grant that advances future Russian reparations payments.
Germany sees no alternative to the reparations loan, with an agreement yet to be finalised and a decision expected at an EU summit next week, European diplomatic sources said.
EU leaders - the European Council - are to meet on December 18 to finalise the details of the reparations loan and resolve the remaining problems, which include guarantees from all EU governments for Belgium that it would not be left alone to foot the bill should a potential Moscow lawsuit prove successful.
Germany would provide 50 billion euros ($59 billion) in guarantees out of a total of 210 billion euros, according to the sources.
If no agreement is found at the EU summit, it would "send a disastrous signal to Ukraine," one of the sources said, adding that this would be a failure of Europe as well.
Danish Finance Minister Stephanie Lose, whose country holds the rotating EU presidency, told reporters "some worries" still needed to be addressed but "hopefully we'll be able to pave the way towards a decision at the European Council next week."
Russian Central Bank says it's sung euroclear
Hungarian Prime Minister Viktor Orban said in a post on Facebook he believed the EU move to freeze Russian assets indefinitely using a qualified majority vote would "cause irreparable damage to the Union."
"Hungary protests against this decision and will do everything it can to restore a lawful state of affairs," Orban wrote.
Russia's central bank said the EU plans to use its assets were illegal and reserved the right to employ all available means to protect its interests.
The bank also said it was suing the Brussels-based central securities depository Euroclear - which holds 185 billion euros of the total assets frozen in Europe - in a Moscow court over what it said were damaging actions, affecting its ability to dispose of its funds and securities.
Belgium's Euroclear has been subject to Russian lawsuits in Moscow courts since the EU froze the assets in 2022 following Russia's invasion of Ukraine.