The financial guarantees EU members will presumably need to offer in the event of a reparation loan to Ukraine should not be included in the deficit and debt targets of the European Economy Commissioner, Valdis Dombrovskis, said on 10th October.
The European Commission has offered the idea of using Russian frozen assets to back a 140 billion euro ($162 billion) loan to Ukraine. The loan would not be repaid until Ukraine gets reparations from Russia for losses suffered during the war that lasted three-and-a-half years.
EU finance ministers debated the loan on Friday, and Dombrovskis reported that Italy’s Giancarlo Giorgetti and others had brought up the question of guarantees.
Dombrovskis indicated that, according to the proposal under consideration, with Russian assets held by the EU until Moscow made reparations, the guarantees should not, in fact, have to be called.
EU statistics office Eurostat would have to certify that this didn’t count towards deficit and debt totals once a solid plan was in hand, though.
Dombrovskis further stated that the Commission was examining how to make sure that renewal of sanctions against Russia could not be vetoed by one or a small number of EU members. Currently, decisions on sanctions call for unanimity.
The commissioner cited an IMF estimate that Ukraine will have a $60 billion financing gap in 2026 and 2027, excluding military aid, and that G7 ministers next week at the annual World Bank and IMF meetings in Washington would discuss support for Ukraine.
Dombrovskis explained the EU was not seeking other G7 members to pledge the EU loan, but rather for them to use analogous mechanisms for frozen assets in their jurisdictions. Britain and Canada were interested in emulating the European model, he added.
The Russian central bank had earlier confirmed having some $300-350 billion of assets frozen in the West.
Most of the immobilised assets are in Europe, and most are already matured and are cash in the possession of the Belgian securities repository Euroclear. Belgium stated that other members of the EU have to bear the risk of making the loan to Ukraine.
