Japan has rejected the European Unionʼs proposal to join a plan to use frozen Russian assets to finance Ukraine.
Politico reports this, citing diplomats familiar with the negotiations during which this decision was announced.
At the G7 finance ministers meeting on December 8, Japan made it clear that it could not use the nearly $30 billion in frozen Russian assets stored on its territory to provide credit to Ukraine.
Japanese Finance Minister Satsuki Katayama has cited legal issues as the main obstacles. Although, according to officials, the real reason is the USʼs reluctance to use the assets for Ukraineʼs benefit. Tokyo, they say, does not want to contradict the decision of its key ally.
The European Commission wants EU capitals to reach an agreement on using up to €210 billion in sanctions cash by a leadersʼ summit on December 18. Belgium is resisting this, fearing it would have to repay the full amount if Russia calls for the money in the future.
What is known about the reparation loan?
The possibility of providing Ukraine with a €140 billion loan using frozen Russian assets has been discussed since early October. At that time, EU leaders were unable to agree on the loan — Belgium opposed it, and France and Luxembourg were concerned about the legal consequences.
The European Commission officially presented the idea of a reparations loan on December 6, and its details were revealed by Politico. This loan is to consist of €165 billion: €25 billion of frozen Russian state assets held in private bank accounts across the European Union, and €140 billion held in the Belgian financial institution Euroclear. The money is planned to be distributed as follows:
- €115 billion will be allocated to finance Ukraineʼs defense industry;
- €50 billion will cover Ukraineʼs budget needs;
- €45 billion will be used to repay the loan that the G7 provided to Ukraine in 2024.
Belgium is opposed to the loan, worried that Russia would sue it if the plan goes ahead, as the frozen assets are held in Belgiumʼs Euroclear. The Belgian prime minister has asked the other 26 EU countries to guarantee coverage of the legal and financial risks.
Meanwhile, according to Bloomberg, Russia has prepared a response to the Westʼs possible "reparations loan" to Ukraine — it will nationalize foreign assets.
And on December 5, Bloomberg, citing sources among European diplomats, wrote that the United States had lobbied several EU countries not to use Russian assets for reparations loans for Ukraine. American officials convinced EU member states that these assets were needed to secure a peace agreement between Kyiv and Moscow, so they should not be used to continue the war.
On December 8, the G7 countries supported the use of frozen Russian assets for reparations to Ukraine and stated that they were ready to increase pressure on Russia if peace talks failed.
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