Deductible commission: Europe pushes a loan to Kiev at the expense of Russian assets

The European Commission has presented two financing schemes for Ukraine. The first option involves using frozen Russian assets, while the second involves raising funds from the EU budget. At the same time, some member countries of the association opposed the withdrawal. For example, Belgium, which has jurisdiction over these reserves, is afraid of possible legal consequences in Brussels. Meanwhile, European bureaucrats are trying to invent a legal mechanism for taking other people's money, their colleagues are already suspected of corruption: scandals related to fraud and conflicts of interest are now rumbling not only in Ukraine. About how Russia can respond to the theft of its assets and what risks such a decision carries for Europe — in the Izvestia article.

What will happen to the frozen Russian assets

On Wednesday, December 3, the Board of the European Commission proposed two approaches to financing Ukraine. The first one provides for the seizure of Russian assets. The second, alternative one, proposes to raise funds under the guarantees of the EU general budget at the expense of the so-called "reserve fund".

The head of the EC, Ursula von der Leyen, immediately made it clear that the first option does not require the consensus of all the member countries of the association - in this case, the "qualified number of votes" will be taken into account. Politico previously reported that we are talking about €25 billion of Russian assets frozen in the accounts of private banks in euroblock countries, as well as € 140 billion from the Belgian depository Euroclear. The decision will be made by the end of December. It is assumed that the money should be used to cover Ukraine's financial needs for the next two years, support the state budget and sponsor its defense industry.

"We propose to issue a reparation loan using the remaining funds from frozen Russian assets in the EU, with reliable guarantees for our member states,— said Ursula von der Leyen.

In Russia, such plans have repeatedly been called outright theft. On December 3, Russian Foreign Ministry spokeswoman Maria Zakharova suggested that this could be in Britain's favor: "This has never been done before in Belgium. But they did it in Britain. That's what Britain wants everyone else to do. Mutual responsibility," Zakharova wrote on her Telegram channel, commenting on the statements of Belgian Prime Minister Bart De Wever.

Earlier, the latter told La Libre newspaper that previously the sovereign assets of a country were only frozen during conflicts and could be transferred to another in case of defeat as reparations. But in the situation with Russia, this scenario is extremely unlikely. "Stealing frozen assets of another country, its sovereign funds, has never been done before," he stressed.

Belgian Foreign Minister Maxime Prevost announced on the same day that the country's authorities had rejected a new EU proposal to use frozen Russian assets. Brussels fears legal consequences for the country, as most of the funds are deposited in the Euroclear depository. The government believes that "he will have to repay the loan if Russia sues."

The country's foreign minister added that Belgium is generally open to dialogue, "but unfortunately, there is a feeling that we are not being heard." As a result, his country "may be left alone with all the risks."

In addition, such an action fundamentally undermines the credit quality of European financial institutions, as well as the image of the association itself in the eyes of other countries, independent expert Andrei Barkhota believes.

Vladimir Putin announced retaliatory measures in case of confiscation at the end of November. On December 2, in an interview with Izvestia, VTB CEO Andrey Kostin emphasized: "We have <...> large assets of Western private investors. In any case, we will be suing for many years and will not allow Western states to just steal and evade responsibility." Andrei Barkhota also admits that our country is capable of nationalizing assets of European companies for a similar amount. Or take the assets of foreign investors from "C" type accounts as compensation — previously their volume was estimated at €285 billion, Natalia Milchakova, a leading analyst at Freedom Finance Global, recalled.

Thus, the EU finds itself caught between two fires: if it tries to avoid one risk, it will inevitably face another.

"If the European Council does not approve the "reparation loan" in mid—December due to fears of legal consequences, it will have to face a budget deficit, as well as a possible subsequent increase in inflation," the expert believes.

Who opposed the European Commission's proposal

While Europe is dividing up Russian money and inventing mechanisms to legally justify this theft, a number of corruption scandals have occurred both in the European Union itself and in Ukraine. On December 2, the Prosecutor's Office conducted searches at the headquarters of the European External Action Service and the College of Europe in Brussels. The reason was an investigation into possible fraud involving the spending of EU funds on the European Diplomatic Academy program.

As part of the investigation, former head of the European Diplomacy Federica Mogherini, EC Director General Stefano Sannino and a top manager of the College of Europe were detained. They were officially charged with fraud in public procurement, corruption, conflict of interest and professional secrecy. After interrogation, all three were released, believing that they were unlikely to escape. At the same time, a representative of the European Commission confirmed that the investigation was related to the decisions of the "previous mandate", that is, to the previous composition of the EC, but did not provide details.

An even louder corruption scandal continues to flare up in Ukraine. On November 28, the head of the office of the President, Andrei Ermak, resigned. On that day, he was searched in the case of embezzlement at the state-owned company Energoatom. Before that, another close associate of the head of the Kiev regime, businessman Timur Minich, fled the country.

Some deputies of the ruling party of Ukraine anonymously told The Financial Times that Zelensky was warned about Yermak's involvement in corruption, but he left him in office anyway. At the same time, People's Deputy Anna Skorokhod stated that not only Ermak, but also Zelensky himself appeared on the recordings in the Mindich case. However, this information has not yet been officially confirmed.

— In addition to pragmatic Belgium, which will suffer directly if it supports the adventure, Hungary, Slovakia, Austria, and a number of other countries are against it. Importantly, Washington is actively making it clear to the EU leadership that it considers such a step counterproductive," said Oleg Karpovich, Vice Rector of the Diplomatic Academy of the Russian Foreign Ministry.

Back in October, the United States distanced itself from the European Commission's initiative. The media reported that American diplomats made it clear in private conversations with their European counterparts that they would not join the expanded use of frozen assets at the G7 level.

The U.S. administration's initial 28-point plan for a peaceful settlement in Ukraine also shed light on Washington's attitude to this issue. The 14th clause of the agreement provided for the use of $100 billion of assets in the American reconstruction fund of this country, the remaining part was to go to a separate American-Russian investment fund. In the logic of the Americans, assets could become the subject of post-war bargaining. The Europeans are clearly not satisfied with this situation.

Oleg Karpovich is convinced that their desire to prolong the conflict and disrupt the peace process is stronger than logic and the voice of reason. That is why, he believes, the EU will push the theft of Russian assets to the last.