Good afternoon. Welcome to our press conference with President Von der Leyen and Commissioner Dombrovskis on the financing of Ukraine. This is one of the topics that was discussed and adopted this morning at the college meeting. President Von der Leyen.
Yeah, thank you very much. Good afternoon. Indeed, we have been discussing and then adopting the proposals for a potential reparations loan. The backdrop against which this has been decided is the fact that Ukraine really stands at a critical juncture. The negotiations towards peace are ongoing. While we see that Russia is increasing its attacks, they are intensifying. And we see also in parallel the growing needs for financing of Ukraine. If you look at the IMF, the IMF estimates that Ukraine will need 135 billion euros for the next two years, that is 2026 and 2027. This is needed to keep the state and the basic services running, the civilian side, but also to continue enabling the brave resistance on the battlefield of Ukrainians, the military side. From the beginning, Ukraine can rely on the fact that Europe will remain the strongest and most steadfast partner. We all know that we can never match the sacrifice of the Ukrainian people. But what we can match is their stamina, their resolve, their staying power, and we can equip them with the means to defend themselves and to lead peace negotiations from a position of strength. And since pressure is the only language the Kremlin responds to, we can also dial it up. We have to increase the costs of war for Putin's aggression. And today's proposal gives us the means to do this. So what is this proposal? Today we are proposing to cover two-thirds of Ukraine's financing needs for the next two years. So this is 90 billion euros. The remainder would be for international partners to cover. And today we are tabling two solutions to member states to agree on. The first solution is EU borrowing. That is basically raising capital at the capital markets and using the EU budget as a guarantee for that and hand this capital as a loan to Ukraine. This solution must be established by unanimity. And the second solution that we are proposing today in the legal text is a so-called reparations loan. Here we would use the cash balances from the immobilized Russian assets in the European Union. We propose to cover all financial institutions that have accumulated such cash balances, and these institutions would have to move the cash into the instrument of the reparations loan. So in other words, we're taking the cash balances, we're providing them to Ukraine as a loan, and Ukraine has to pay back this loan if and when Russia is paying reparations. This solution can be established by qualified majority voting. Then there's a question how we would use the money. First, we would use the money for Ukraine budget support, and here we would build on the success of existing instruments. You know them both: that is on one hand macro-financial assistance and or the Ukraine facility. And the second topic where we will be using this money is military support. Here the main goal is to further boost Ukraine's defense industrial capabilities and integrate their capacities into our defense industrial base. And here we would use a so-called cascading principle. In other words, the funds would be used predominantly to produce and purchase from Ukraine and the European Union and so-called EEA after countries. But if we have urgent needs that cannot be met by Ukraine or the European Union, then we allow with this money the purchase of these urgent needs from outside. Now we had an intense discussion also on the position of Belgium where Euroclear, the main source, is situated. We have listened very carefully to Belgium's concerns and we have taken almost all of them into account in our proposal that is today on the table of the reparations loans. We have very strong safeguards in place to protect member states and to reduce the risks as much as possible. For example, to ensure that an illegitimate award outside the union cannot be enforced inside the union. And very important, we have created a very strong solidarity mechanism where in the very end the union can intervene because we want to make very sure to all our member states but specifically also to Belgium that one thing is for sure: we will share the burden in a fair way as it is the European way. Finally, with the reparations loans, we also aim for emulation among the friends and international partners of Ukraine. And to conclude, we want peace and no one wants more peace than Ukraine. Therefore, today we're sending a very strong signal to the Ukrainian people that we are in for the long haul. We can equip them with the means to defend themselves and even more important with the means to lead peace negotiations from a position of strength. And the message to Russia is that the reparations loan or the EU borrowing, one of the two solutions, is increasing the cost of war for Russia and invites Russia to come to the negotiation table to finally find peace. Thank you very much and I hand over to you, Valdis.
Thank you, President. Good afternoon everyone. Indeed, we stand at a crossroads. The outcome of Russia's brutal war against Ukraine is one that will also determine the EU's security and freedom. We must act now and to succeed we must act together. The proposals we put forward today work for Ukraine, the EU and its member states. Because in providing this lifeline to Ukraine, we are also enhancing our security. Not providing support that Ukraine needs to continue its fight for survival would come with a high cost not only to Ukraine but also to our entire continent's security and freedom. And we are also sending a strong message to Russia. First of all, let me stress that everything we propose today is legally robust, fully in line with EU and international law. It respects the principle of sovereign immunity and the reparation loan is without prejudice to the claims of the central bank of Russia. Now, as the president has already explained our two solutions including the reparations loan, I will focus on protections and safeguards contained in the proposals. Having listened carefully to all member states, we propose to set up a robust system that builds on existing safeguards we have created over the last years. In a spirit of solidarity, we call on member states to provide guarantees to underpin the loan. These guarantees ensure that the EU borrowing is fully protected and ensures fair burden sharing among member states. This time it is time to show the strength of the union. Under the next multi-annual financial framework, these guarantees would be taken over by the headroom of the EU budget and should there be unanimity to amend the current MFF regulation, which we are proposing, this protection could already be provided in this MFF headroom. In short, these protections will cover the unlikely event that the union would have to repay its borrowing without reparations whilst at the same time covering any member state if it is forced to pay a claim from Russia. Although the risk of this happening is very low. First, these are not acts of individual member states but are acts of the union which are fully in line with EU and international law. Second, existing protections ensure that claims against Belgium or any other member state cannot be enforced in the EU due to the so-called no claims clause. Thirdly, to address the risk of enforcement of non-sovereign assets of member state in third countries, we are introducing a provision that allows the recovery of damages. The proposals also provide for mechanisms to deter any actor facilitating enforcement of claims on behalf of Russia or actors sponsored by Russia, be it inside or outside the union. The guarantees would build on all these safeguards where it's only appropriate that the act of the union entails the union's responsibility and not responsibility of any one member state. Finally, we're also proposing today provisions for continued immobilization of Russian assets in the EU. Russia's war on Ukraine is not only a flagrant breach of the international order, it represents a major distortion of the EU economy. In addition, Russia has ramped up its hybrid attacks over the territory of the union. This is why a proposal for the new regulation provides a legal basis for measures appropriate to this economic and security situation, including the prohibition of transferring the immobilized assets to Russia. And it is in line with the European Council conclusions that state, let me remind you, that Russia's assets should remain immobilized until Russia ceases its war of aggression against Ukraine and compensates for the damage caused by this war. This regulation will work in parallel with the sanctions regime. In terms of volumes of financing, there are around 210 billion euros worth of immobilized assets in the EU. This is therefore the maximum loan amount we could propose. The president already explained how the money would be allocated. It would not be disbursed in one go but built to respond to Ukraine's evolving needs. This would be spelt out in a financing strategy to be submitted every year and we will also keep 45 billion euros of these amounts in reserve to repay existing loans, ensuring that the earlier loans do not add to Ukraine's debt burden. And last but not least, the proposals are underpinned by Ukraine meeting essential preconditions to receive support. This includes respect for democratic mechanisms, human rights and the rule of law, including fight against corruption. To conclude, time is of essence. Ukraine's needs are not only sizable but also urgent. We now call on member states to show unity and decisiveness. We must move forward with providing Ukraine with the support it urgently needs to stand up for its people, sovereignty and the security of all of Europe. Thank you.
Thank you very much. And before taking your questions, just a short reminder that we will have a technical briefing on this very same topic immediately after this press conference. So please keep your questions of a technical nature for that moment. Agate.
Hello. Thank you so much. I get declare for... Bard is still not convinced by what he saw. He said Maxim, the foreign minister, has a feeling that Belgium hasn't been heard. How do you answer to those fears, to those worries that stay? What would happen if Belgium still needs to be retaliated by Russia on the treaty? And my second question is, you said that this mechanism only requires a qualified majority. Is there a possibility that if Belgium still doesn't agree, it will still be going on? Thank you so much.
So for us, it's very important that we accommodate all the concerns and perceived risks in Belgium. And we share absolutely the same goal like Belgium that the risks have to be shared by all of us and have to be fairly and evenly distributed and that we have to put in place, which we've done, mechanisms that protect all our member states and this of course includes specifically also Belgium. We had many, many consultations on all different levels. We're not done with the consultations. So this is a process that starts now with the legal proposal on the table and of course we'll discuss this legal proposal with the member states and the parliament. So with this proposal as with any proposal there will be improvements. And it is important to stay in very close contact with Belgium. But let me tell you that for example, of the main asks, the three most important, we have actively of course included among others in this proposal to answer them. The first was that Belgium asked that not only Belgium and not only Euroclear are covered by this approach of the reparations loan. And you see in the proposal that we have extended the scope to all CSDs, so central securities depositories, and commercial banks in the European Union. Therefore the big figure of 210 billion euros that Valdis was just explaining. The second is indeed that Belgium has asked for a strong mechanism of burden sharing and we have responded by making sure that a strong guarantee is in place to cover any damage occurring in member states contributing to the loan. As the scope is broader, the asks of Belgium are concerning much more member states too. And the third is that they ask rightly so to make sure that Euroclear can always honor their obligations in case they had to pay back to Russia. And we also have ensured this through a very strong liquidity mechanism, making sure that the necessary cash is always available. And this includes not only the member states but also the European Union budget.
And the question of qualified majority maybe Commissioner Dombrovskis.
Well, yeah, maybe to reiterate, when designing this proposal we had been taking Belgium's concerns very much in mind. That's why it comes with strong safeguards and solidarity mechanisms and we are introducing also safeguards against possible action of Russia against non-sovereign assets in Russia or third countries, also allowing for offsetting any action then against Russia's non-sovereign assets in the territory of the EU, so providing additional safeguards in this regard. Well, now the proposal is out. Indeed, the reparation loan proposal and accompanying documents can be decided on qualified majority basis. We now need to hear from member states based on concrete proposals which are put forward to see how we move forward with this.
Julia Payne from Reuters. I was wondering if I could ask about the US attitude to your decision to use the assets as Trump was keen to use them in the peace negotiations with Russia. Have you spoken to Trump about it? What is the US administration's view on your proposal?
