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Merz and von der Leyen pressure Belgium over seizure of frozen Russian assets

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German opposition leader Friedrich Merz and European Commission President Ursula von der Leyen are increasing their pressure on Belgium to grant access to the foreign assets of the Russian Central Bank held in the country.

At least 90 billion euros are intended to help financially stabilize Ukraine by 2027. Following talks between Merz, von der Leyen, and Belgian Prime Minister Bart De Wever in Brussels on Friday evening, the EU is now targeting Euroclear, a financial services provider that holds 185 billion euros worth of Russian assets.

The Commission states it can address the company’s concerns. However, Euroclear CEO Valérie Urbain reiterates that accessing Russian state funds violates state immunity and, therefore, international law.

Euroclear has already begun receiving inquiries from other central banks about whether their investments are still secure. The company is considered “systemically important,” and it is argued that if too many investors withdraw their assets, a financial crisis could emerge.

US economist Jeffrey Sachs also warns that the step advocated by Merz and von der Leyen could trigger a deep crisis in Europe, with consequences that could divide the EU.

The Merz-von der Leyen plan: Russian assets to go to Brussels, not Kyiv

Ursula von der Leyen’s proposal primarily involves gaining access to a significant portion of the Russian Central Bank’s foreign assets held by the Belgian financial services provider Euroclear, which have been frozen due to EU sanctions.

This includes 90 billion euros, about half of Russia’s total assets of 185 billion euros. This amount would be transferred to the EU in two installments of 45 billion euros each in 2026/27 and then forwarded by the EU to Kyiv as a loan.

Euroclear would be legally obligated to hand over these funds. It is said that Russia could only reclaim these funds if it agrees to pay reparations. If Russia pays reparations, Ukraine must use this money to repay its debt to the EU or, through the EU, to Euroclear.

This contradicts the primary purpose of reparations, which is reconstruction, yet the EU insists on this course of action.

The EU claims that after the 90 billion euros cycle from Brussels to Kyiv and back to Brussels, Russia’s foreign assets will return to where they belong and be available for use by the Russian Central Bank again.

The “international law” enigma

This questionable plan, which German opposition leader Friedrich Merz agrees with in principle and claims is “fully compliant with international law,” has many contradictions and weak points.

According to German Foreign Policy, the first weak link is the assertion that Russia would only be obliged to pay reparations if it is defeated in the war. However, in the current state of the conflict, a Russian defeat seems unlikely.

If no reparations are paid, no funds will flow back from Kyiv to Euroclear, and the Russian Central Bank will be permanently deprived of its assets.

However, this situation seems likely to be the case from the day the billions are transferred to Kyiv.

As Euroclear CEO Valérie Urbain recalled on Monday, the assets of the Russian Central Bank “belong to the Russian state” and are “legally protected as they are subject to the principle of state immunity in international law.”

Urbain acknowledges that the money can be “immobilized,” but she points out that “anything beyond that” would call international law into question.

Belgian Prime Minister Bart De Wever notes that even during World War II, frozen state assets were not used “for another purpose” during an ongoing war.

Belgium’s resistance could be broken

So far, attempts to implement the von der Leyen plan, inspired by Merz, have failed due to the clear and persistent resistance of Prime Minister De Wever.

De Wever states that any Russian lawsuits in national or international courts regarding the theft of central bank assets would be directed at Euroclear or Belgium.

In the event of a conviction, Belgium would be forced to repay the assets.

Merz and von der Leyen have repeatedly claimed that EU member states would support Belgium and, if necessary, participate in the repayment.

However, inside sources indicate that De Wever will be given no guarantees on this matter. For example, Merz cannot legally commit to paying Germany’s share of the total amount—which runs into tens of billions of euros—without the approval of the Bundestag.

The situation is similar in almost all EU countries. The necessary parliamentary approval cannot be obtained in such a short time.

But De Wever, who “knows the EU’s tricks and intrigues very well,” wants a guarantee that he will not be left in a difficult position in the event of repayment. It is unclear how this contradiction will be resolved.

Financial stability at risk

Beyond the internal contradictions within the EU, Euroclear CEO Urbain also points to vulnerabilities outside the bloc.

Urbain notes that Russia could defend itself against the theft of its assets by “seizing” Euroclear’s assets in Russia. The amount in question is approximately 18 billion euros.

Russia also has the option to seize the assets of other financial institutions and companies in Belgium and the EU to compensate for its losses, provided it has practical access to them.

Urbain also states that the Merz-von der Leyen plan poses “significant risks to financial stability.” Investors might get the impression that their money is no longer safe in Europe and could withdraw it.

Euroclear also announced that it has already received concrete questions from several central banks “about the security of their deposits.” Urbain emphasized that Euroclear holds securities worth 42 trillion euros and is not a “small institution,” highlighting that the company is “systemically important.”

Sachs: EU could split if Russian assets are seized

Late last week, renowned US economist Jeffrey Sachs pointed to potentially serious political consequences.

In an interview with the newspaper Berliner Zeitung, Sachs said the Merz-von der Leyen plan not only violates international law but would also entail “very high costs” for the EU, “deeply divide Europe, and poison relations within the EU.”

Sachs indicated that if the resistance of a few countries like Belgium is simply ignored by Germany, the EU could be “plunged into turmoil,” arguing that Russia’s retaliatory measures could lead to a deep crisis in Europe.

Sachs said the political backlash against Merz, Macron, and von der Leyen in Europe would be severe, especially if the EU’s actions are seen as “a show of force by Germany led by Merz and Leyen.”

Sachs reported that outside of Europe, European heads of state and government are being “met with astonishment and concern,” arguing that Europe’s leadership is “perceived as very weak and foolish.”

Above all, Sachs suggested that Merz’s popularity will continue to decline, stating, “It will destabilize German politics.”

Europe

Fico accuses Merz of blackmail over threat to veto EU budget

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Slovak Prime Minister Robert Fico has hit back after German Chancellor Friedrich Merz threatened to veto the EU budget unless funding for Ukraine is secured.

Merz said he would block the EU’s seven-year budget if no agreement is reached on financial assistance for Ukraine.

The chancellor’s intervention has angered Central European leaders who are net beneficiaries of EU funds but do not want to take part in the next round of funding to support Ukraine’s war effort.

“What the chancellor is doing is typical blackmail, and I will not bow to it,” Fico told reporters in Bratislava.

Fico spoke alongside his Czech counterpart, Andrej Babiš, whose government has refused to participate in a future loan to Ukraine.

“I do not know why he said this,” Babiš said, referring to Merz’s stance.

Merz wants EU leaders to discuss Ukraine’s financing needs at a summit in Dublin on Friday.

In a letter to European Council President António Costa, who will chair the meeting, obtained by The Guardian, Merz wrote:

“We must maintain our support for Ukraine in its struggle to defend itself. This is our shared vital interest. Yet bilateral aid provided to Ukraine is distributed unevenly, with the burden shouldered mostly by only a few member states.”

The EU agreed last year to provide a €90 billion loan to Ukraine, intended to cover two-thirds of its military and civilian spending for 2026 and 2027.

Since then, however, Russia’s relentless bombardment has placed a heavier financial burden on Kyiv, prompting President Volodymyr Zelenskyy to ask for €70 billion to plug the budget deficit.

The EU has endorsed Zelenskyy’s figures and pledged to find €45 billion. Ukraine’s other allies, such as Britain and Canada, are expected to cover the rest.

Last year, Merz launched an initiative to tap €210 billion in frozen Russian state assets held in the EU, but the plan fell through due to opposition led by Belgium, which holds most of the funds in Brussels.

The €90 billion loan was the backup plan. Having opted out of that loan, Hungary, Slovakia, and Czechia indicated that they would not take part in the next round either.

Bulgaria joined these three member states following the election of Prime Minister Rumen Radev last April.

The question of funding for Ukraine is now spilling over into the fraught negotiations on the 2028-34 EU budget.

Germany, the largest net contributor, wants substantial cuts to the proposed budget and opposes the EU providing generous funding to member states that refuse to contribute to Ukraine’s financial needs.

Merz states in his letter that a “collective commitment without exceptions” is a “fundamental prerequisite” for closing Ukraine’s financing gap and for “discussing other matters, particularly those with financial implications.”

He also notes that, in the context of the EU’s next seven-year budget, known as the Multiannual Financial Framework, all member states must contribute to a “robust” financial perspective for Ukraine from 2028 onwards.

A German government official said:

“For the Multiannual Financial Framework (MFF) to be successfully concluded, it is vital that all EU member states provide financial support to Ukraine.”

Berlin is also aiming to shift decision-making on funding for Ukraine from unanimity to qualified majority voting, in an effort to prevent a single government from blocking EU decisions.

The letter reflects mounting frustration among the EU’s northern member states, Ukraine’s most generous backers, over lower contributions from other EU countries in Central and Southern Europe.

The task of brokering an agreement on the budget falls to Costa, the former Portuguese prime minister.

Costa wants a deal by the end of the year, ahead of elections in France, Poland, and Italy in 2027 that could complicate the process.

A spokesperson for Costa confirmed receipt of the letter without elaborating on details. “President Costa will dedicate time to the Ukraine issue at the informal European Council meeting in Dublin this week,” the spokesperson said, adding that funding for Ukraine would be addressed at a dedicated summit on the EU budget scheduled for 26-27 November.

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EU expects next Israeli government to adopt less aggressive posture

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The EU expects the next Israeli government to mend its “difficult relationship” with Brussels and adopt a more constructive approach toward Gaza and illegal settlements.

Israeli President Isaac Herzog tasked Gadi Eisenkot, the leader of the anti-Netanyahu bloc, on Sunday with forming a government.

Eisenkot stated that the country faces a “catastrophic diplomatic crisis” as traditional allies begin to reassess their relations with Israel.

Speaking to Rapporteur, several European diplomats stationed in Tel Aviv said they expect ties to get back on track.

“Whatever government comes in, we can try to revitalize relations because Israel is clearly a very important partner,” one European diplomat said, adding that Brussels expects the next administration to be “less aggressive”.

The diplomat noted that relations with Europe are currently “not very good”.

Israel cut off communication with Kaja Kallas, the EU high representative for foreign affairs and security policy, after Rapporteur revealed in June that she had compared Israel to apartheid-era South Africa during a visit to Mexico.

The diplomat stated that this decision, taken ahead of elections, was political in nature. A second European diplomat based in Brussels explained that the announcement came only a few days before an official visit by Dubravka Šuica, the European commissioner for the Mediterranean.

“This could have been interpreted as a tactic to divide Europe, but Israel had asked Kallas to deny the report; she did not do so,” the second diplomat said.

Brussels has repeatedly voiced its frustration with Israel over the humanitarian crisis in Gaza and the expansion of West Bank settlements.

However, EU governments blocked almost all sanctions proposed by the European Commission.

A third diplomat said opposition parties would “almost certainly take the issue more seriously” when it comes to tackling violence by West Bank settlers:

“We see Palestinians being expelled from their homes and new illegal settlements being built in the West Bank. There is a reluctance on the part of the current government to address this issue, which causes problems in our relations.”

The new government is expected to ease pressure on Palestinians and halt construction of the E1 settlement project, a controversial plan to build settler housing in the West Bank east of Jerusalem.

“They will probably try to deal with the problem of extremist settlers in the West Bank,” the diplomat added.

On Gaza, the diplomat described the situation as “a complete nightmare”, with two million Palestinians crowded into an area that accounts for roughly 35% of the territory.

“There are not enough tents for the winter, and not enough vaccines are reaching the area despite an increase in diseases,” the diplomat said.

The European official argued that Donald Trump’s peace plan met all the conditions for Europe. Although the EU had much to offer, neither the US nor Israel appeared interested in EU involvement in the process.

“We are currently training Palestinian police in the West Bank, and if permitted, we could do the same in Gaza,” the diplomat said.

The diplomat disclosed that Israel had agreed with Šuica that Europe would finance two projects aimed at improving sewage and water infrastructure in Gaza, continuing:

“However, none of these projects has started yet because there is a serious problem with dual-use goods. Getting materials into Gaza is very difficult because the Israelis say they could be misused if they fall into the wrong hands of Hamas.”

Israel insists that Hamas must be disarmed before subsequent phases of Trump’s plan can proceed.

With disarmament unlikely to happen in the near term, the EU argues that certain measures can be carried out in parallel.

“We can begin rebuilding sanitation systems in Gaza. We can start building desalination plants. We can begin providing energy and water to Gaza,” one diplomat said.

While Brussels hopes for progress on Gaza and the West Bank, it maintains that expectations regarding the establishment of a Palestinian state need to be “managed”.

The EU continues to advocate a two-state solution, yet most leading Jewish parties oppose the creation of a Palestinian state.

The diplomat noted that the next Israeli government will likely have “a very slim majority and not much room for manoeuvre”.

There is also a “major misunderstanding” between the EU and Israel that must be addressed. According to the diplomat, Europeans fail to recognize the “psychological impact” of 7 October on Israelis.

“This event changed the country and made the two-state solution even more distant than before,” the diplomat said.

In return, some Israeli politicians believe Europe has betrayed Israel despite what they view as a fight against “Islamist terrorism”.

“Their argument is that European politicians are somewhat afraid of the Muslim population in Europe,” the European diplomat said.

Europe strongly opposes Iran and the possibility of Tehran acquiring nuclear weapons, imposing sanctions in response.

However, the diplomat argued that the EU would not participate in a war because it lacks a common army:

“We are a diplomatic and economic power, which is why we resort to sanctions and diplomacy. The expectation that we would take part in a military operation is unrealistic.”

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Germany threatens EU budget veto over long-term Ukraine aid

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Germany has threatened to veto the European Union’s joint budget for the 2028-2034 period, which is currently under negotiation, unless every member state commits to providing financial support to Ukraine in 2027 and subsequent years, German Chancellor Friedrich Merz warned.

According to a report by the Financial Times (FT), Chancellor Merz set out Berlin’s condition for the budget talks in a letter addressed to European Council President António Costa.

In his letter, Merz wrote: “A collective commitment that every single one of us, without exception, will make a fair contribution to closing Ukraine’s budget deficit is an indispensable prerequisite for resolving this budget issue and, in particular, for addressing subsequent matters that carry financial implications.”

The German Chancellor stressed that a formula backed by all member states must be established to provide Ukraine with a reliable, multi-year financial perspective starting from 2028.

Merz also insisted that any agreed solution must cover the interest payments on debts incurred to finance the assistance provided to Kyiv.

Conversely, several countries within the bloc have cut financial aid to Ukraine, and the number of capitals adopting this stance is projected to rise next year.

In December 2025, Hungary, Slovakia, and the Czech Republic approved the EU’s 90 billion euro loan package for Kyiv only on the condition that they would not contribute to its costs themselves.

Alongside these three countries, Bulgaria has also stated that it does not plan to participate in subsequent financial assistance packages for Ukraine.

In France, far-right leader Marine Le Pen, who could potentially win the presidential election scheduled for spring 2027, recently told the FT that Paris has run out of funds.

Le Pen assessed: “The honest approach is to tell Mr Zelensky clearly, and even warn him: ‘Look, we cannot do more. We have already allocated the 90 billion euro EU loan, in which France’s share amounts to 18 billion euros. 18 billion euros is genuinely a huge amount of money.'”

The EU’s 90 billion euro loan, covering the 2026-2027 period, aims to meet two-thirds of Ukraine’s financing requirements.

Brussels expects the remaining 45 billion euros to be covered by other partners, including Canada, the UK, Norway, Japan, South Korea, and Australia.

Germany remains the largest net contributor to the EU budget.

In contrast, the four Eastern European countries seeking to avoid financing Ukraine rank among the largest net beneficiaries of the bloc’s budget.

Leveraging this balance, Chancellor Merz aims to use his influence in the EU budget negotiations to secure uninterrupted support for Kyiv in 2027 and the years beyond.

According to the FT, Berlin is also demanding that future aid packages be decided by qualified majority voting rather than unanimity, which is required under the current system.

A German government spokesperson told the newspaper:

“The issue of Ukraine’s financial needs must be resolved within the framework of the next EU budget. Financial support for Ukraine from all EU members is decisive for the successful conclusion of the budget talks.”

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