From the Finantial Times article:
The European Central Bank has blocked a major EU plan to give Ukraine a €140 billion loan backed by frozen Russian assets. The ECB says the proposal is illegal under EU law.
The European Commission wanted the ECB to act as a safety net for this massive loan. If something went wrong and Russia suddenly got its assets back, the ECB would step in to prevent a crisis.
But the ECB concluded this would violate EU treaties because it would essentially be financing governments directly, which central banks can't do. This practice leads to high inflation and undermines central bank independence.
The timing makes this urgent. Ukraine needs funding for the next two years as it deals with intensified Russian attacks and uncertainty around US support. The EU has frozen about €210 billion in Russian assets since 2022, and the plan was to use these as collateral.
Belgium is particularly worried about the risks. Prime Minister Bart De Wever calls the plan "fundamentally wrong" and wants ironclad guarantees from all other EU countries before moving forward. His concern: if EU sanctions lapse (they need unanimous renewal every six months, and Hungary sometimes objects), Russia could demand its money back immediately. Euroclear, the Belgian institution holding these assets, would be stuck.
The European Commission is now scrambling to find alternative ways to provide the necessary backstop. EU leaders are supposed to decide on Ukraine funding at a December 18 summit, so they need a solution fast.
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