BERLIN – The European Union faces potential “severe damage for years” if its leaders fail to reach an agreement on a crucial multi-billion-euro loan for Kyiv at an upcoming summit in Brussels, German Chancellor Friedrich Merz cautioned on Monday.
Merz is a leading advocate for this vital financial aid to Ukraine, which proposes utilizing frozen Russian central bank assets primarily held in Belgium. A significant concern in Brussels is that both Moscow and Washington could exploit internal divisions among the 27 member states, undermining efforts to secure this critical support for Ukraine during Thursday’s European Council meeting.
“Let us not deceive ourselves. If we do not succeed in this, the European Union’s ability to act will be severely damaged for years, if not for a longer period,” Merz stated in Berlin, referencing the proposed €210 billion loan backed by Russian frozen assets. He added, “And we will show the world that, at such a crucial moment in our history, we are incapable of standing together and acting to defend our own political order on this European continent.”
Merz’s remarks came during a period of intense diplomatic activity in Berlin, where Ukrainian President Volodymyr Zelenskyy, envoys from U.S. President Donald Trump, and European leaders gathered to discuss potential pathways to end the conflict in Ukraine. A central theme of these discussions revolved around security guarantees for Ukraine. Both Zelenskyy and Merz indicated significant progress on this front, with Washington reportedly considering security commitments for a future peace deal akin to those extended to NATO allies.
Adding an unusual note to the day’s events, a mysterious power outage affected the German Bundestag around the time of President Zelenskyy’s arrival. While the Bundestag administration confirmed the two-hour disruption, IT personnel were unable to attribute it to a cyberattack.
Increasing Obstacles for the Loan
The German Chancellor’s stark warning echoed sentiments from top EU diplomat Kaja Kallas, who recently suggested that securing the asset-based loan now appears “increasingly difficult.” Merz maintains that leveraging Russia’s frozen assets represents the most viable path for Europe to ensure Ukraine’s financial stability in the coming year.
However, leading up to the Brussels summit, growing apprehension exists that the initiative could falter due to resistance from several EU nations, reportedly under dual pressure from both Russia and the United States.
While Belgian Prime Minister Bart De Wever has highlighted Russian threats regarding asset seizure – with Moscow already initiating legal action against the Belgian bank holding most of the funds – two senior European officials involved in the loan effort asserted that the U.S. is also actively dissuading EU states from supporting the plan. According to these officials, the Americans are not only urging Ukraine to concede territories not captured by Russia but are also pressuring European countries against providing the €210 billion reparations loan. A leaked U.S.-Russia draft peace plan reportedly indicates Washington’s intention to allocate a portion of these assets towards U.S.-led reconstruction efforts, further suggesting a divergence in priorities.
Merz has previously emphasized that Russian assets should not be diverted for America’s economic benefit. Speaking before a foreign ministers’ meeting in Brussels, Kallas acknowledged the “significant pressure from all sides” concerning the reparations loan, which she still views as the “most credible option” to sustain Kyiv financially. “This is what we’re working on. We are not there yet and it is increasingly difficult, but we’re doing the work and we still have some days,” she remarked.
Divisions Within the Bloc
Belgium has consistently expressed reservations about using Russia’s frozen assets for Ukraine, citing potential risks to the peace process and exposure to Russian legal countermeasures. In recent days, Italy, Bulgaria, and Malta have joined the opposition, while Hungary and Slovakia had previously voiced their concerns. Over the weekend, Czechia’s newly appointed Prime Minister Andrej Babiš also opposed the loan, stating Prague would not offer financial guarantees for Belgium.
Despite the growing opposition, unanimous support is not strictly required to utilize the assets, following a recent decision to employ emergency powers to indefinitely immobilize them. A qualified majority vote could potentially overcome the objections of the seven aforementioned countries, as a blocking minority necessitates at least 35 percent of the EU’s total population. However, Kallas underlined the challenge of proceeding without Belgium’s consent, given that the majority of the assets are located within its borders. “I think it’s important that they are on board with whatever we do,” she concluded.