The European Central Bank has rejected a request to provide a guarantee for Ukraine’s €140 billion reparation loan. According to the Financial Times, which cites several officials, the ECB concluded that the European Commission’s proposal falls outside its mandate. The decision further complicates Brussels’ efforts to raise a reparation-backed loan secured against frozen Russian assets held at the Belgian depository Euroclear, the paper notes.
The ECB’s stance adds to the already fraught debate over Belgium’s demands. Earlier, European governments rejected Brussels’ request for a “blank-check guarantee” to cover a potential reparation loan to Ukraine funded through frozen Russian assets, Politico reports. Belgium had sought an insurance mechanism in case Russia filed a lawsuit. The prime minister insisted that EU member states provide financial commitments exceeding €140 billion—funds that could be paid out within days—and that the guarantees remain valid longer than the EU’s sanctions against Russia.
Updated at 10:40 A.M.
Danilo Hetmantsev, chair of the Ukrainian parliament’s finance committee, said the situation had reached a “breaking point” after the European Central Bank declined to provide a guarantee for Ukraine’s so-called “reparation loan.”
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According to four European diplomats, such a scheme would expose their governments to court rulings and create the risk of multibillion-euro payouts years after the war in Ukraine has ended. “If the guarantees are open-ended and without limits, what exactly are we committing ourselves to?” one diplomat said.
The partners’ refusal may complicate loan negotiations ahead of a pivotal December summit. Without progress, the most plausible fallback would be for the EU to issue additional debt to cover Ukraine’s budget shortfall. Yet the idea is unpopular among most governments, as it would draw directly on taxpayers’ money.