BRUSSELS — The European Commission is adamant it has done what’s needed to address Belgium’s concerns about a financial package worth up to €210 billion to fund Ukraine’s defense against Moscow.

The EU executive unveiled the package on Wednesday, first reported by POLITICO, which leverages the cash value of frozen Russian state assets across the bloc — with the lion’s share sitting in Belgium. The Belgian government fears the move would provoke Russian retaliation but, without support, Ukraine’s war chest is expected to run bare in April.

Diplomats are now in a race against time to scrutinize the proposal before EU leaders gather in Brussels on Dec. 18 to decide on whether to proceed with the initiative or meet Ukraine’s financing needs with their own taxpayers’ money. The main stumbling block remains the Belgian government’s opposition to the loan.

“I’m not impressed yet, let me put it that way,” Belgian Prime Minister Bart De Wever said in televised remarks before the proposal was unveiled on Wednesday afternoon. “We are not going to put risks involving hundreds of billions … on Belgian shoulders. Not today, not tomorrow, never.”

Belgium fears Russian retaliation against the state and the financial depository holding the frozen assets, Euroclear. The government is demanding that other EU capitals pay up the full amount if Moscow successfully recovers the money.

Responding to De Wever’s concerns, Commission President Ursula von der Leyen told reporters that “we have put in place mechanisms that protect all our member states and this, of course, includes specifically also Belgium.”

She added that the legal proposal addresses Belgium’s main conditions for supporting the loan, which include more risk-sharing and tapping into assets held by other EU countries beyond Belgium.

Here are the five top questions that De Wever will ask to determine whether the proposal stays within his red lines.

What does the loan to Ukraine look like?

Under the proposal, the EU will lend €165 billion to Ukraine, which it will only have to repay once Russia ends the war and pays reparations. The loan includes €25 billion of immobilized Russian state assets held in private bank accounts in France, Germany, Belgium, Sweden, and Cyprus, in addition to €140 billion held in the Brussels-based Euroclear bank.

As part of the financial package, the Commission will set aside €45 billion to repay a G7 loan to Ukraine, which was agreed in 2024. This brings the total value of the package to €210 billion.

If all else fails, the EU executive said that it can issue joint debt to Ukraine through its multi-year budget. The main drawback is that pursuing this option requires unanimity, an unlikely scenario given Hungary’s repeated threats to block further financing to Kyiv. 

How will the money be spent?

Within the reparations loan, €115 billion has been earmarked to finance Ukraine’s defense industry, while €50 billion will cover Kyiv’s budgetary needs.

The loan reserved for military spending will be disbursed over five years in cash envelopes, known as tranches, under certain conditions to avoid corruption. The bulk of the money, €90 billion, would be available over the next two years. Money reserved for the country’s budgetary needs could last until the end of 2055.

The proposal gives preference to military gear made in Europe or Ukraine, but also allows for buying equipment from foreign allies, such as the U.S., under certain conditions.

What safeguards does Belgium have?

EU governments will provide bilateral financial guarantees of up to €105 billion until 2028 to ensure that Belgium is not alone in handling the risks associated with the initiative. The underlying principle is that EU capitals collectively stump up the full amount of the loan should the Kremlin successfully claw its money back, which the Commission sees as unlikely.

Belgium is demanding that the guarantees exceed the total value of the EU loan and extend beyond the expiry of the Russian sanctions package — and will continue to push for this during the technical negotiations in Council. In further reassurance to Belgium, the Commission will set up a “liquidity mechanism” that can lend money to governments to ensure that the guarantees can be paid out at a moment’s notice.

The EU’s next seven-year budget will take over from national guarantees from 2028, and shoulder the burden through its “headroom,” a financial cushion that ensures Brussels can meet its obligations.

How will the EU keep the Russian assets frozen?

The biggest legal hurdle facing the proposal is the prospect of the assets being unfrozen if pro-Russia countries refuse to keep existing sanctions in place. Under current rules, the EU must unanimously reauthorize the sanctions every six months. That means Kremlin-friendly countries, such as Hungary and Slovakia, can force the EU to release the sanctioned money with a simple no-vote.

The Commission suggested a legal fix that would make this scenario less likely. It aims to trigger a clause in Article 122 of the EU treaty that could make it illegal to return the assets to the Kremlin. The clause is legally uncertain and hinges on the argument that reversing the sanctions would wreak havoc on Europe’s economy. The Commission is confident that it can trigger this legal clause by a qualified majority.

Does this affect the peace deal with Russia?

De Wever claimed last week that the Commission’s proposal would derail a peace deal in Ukraine by removing leverage that might encourage Russian President Vladimir Putin to the negotiating table. But von der Leyen played down the argument, saying that the reparations loan will instead ramp up the pressure on Russia.

“It is a very clear message … to Russia that the prolongation of the war on their side comes with a high cost for them,” she said, adding that the proposal “will contribute positively to the peace negotiations.”

For Ukraine, meanwhile, the scheme would strengthen its negotiating position, ensuring it was not entering peace talks while facing a cash crunch. “It is a leverage that makes it very clear that we are in for the long haul with Ukraine,” she said.

Hanne Cokelaere contributed reporting from Brussels.