In her State of the Union address, Ursula von der Leyen announced the proposal to provide a “reparation loan” to Ukraine to be financed using Russian sovereign assets frozen under sanctions. Until now, the major member states and the European Central Bank had always opposed touching the assets of the Russian Central Bank that have been immobilized. The risk to the euro’s credibility and financial stability was deemed too high. What prompted von der Leyen to act was Germany’s change of position, with Chancellor Friedrich Merz explicitly supporting a \u20ac140 billion loan to Ukraine through the confiscation of Russian sovereign assets. The Commission maintains that from a legal standpoint there will be no confiscation. Russian assets will be invested in bonds issued by the EU and transferred as a loan to Ukraine, thus allowing Russia to maintain formal ownership of a credit. The financial structure envisioned by the Commission is complicated. And it is also full of potential obstacles that could derail the proposal due to opposition from one capital or another. Member states will be required to provide full guarantees to repay the loan if Ukraine is unable to do so. The guarantee for a country like Italy could amount to \u20ac25 billion. The Commission also proposes switching to qualified majority voting on the extension of sanctions, to prevent a veto by a single country from unfreezing Russian assets and forcing member states to shoulder the loan. At the informal summit in Copenhagen on October 1st, there was an initial discussion among heads of state and government. Finance ministers will have a more in-depth debate at the ECOFIN meeting on October 10th in Luxembourg. The decisive appointment is expected at the European Council on October 23rd and 24th.<\/p>\n
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The summit of heads of state and government on October 23rd and 24th will also return to discussing the strengthening of EU defense in the face of the Russian threat. In June, heads of state and government tasked Ursula von der Leyen’s Commission with presenting a “roadmap on defense preparedness,” which should outline all initiatives to ensure the EU is ready for war by 2030. The President of the European Council, Ant\u00f3nio Costa, believes the “roadmap” must contain concrete proposals to finance the enormous investments in the sector, necessary not only in the event of war but also to meet NATO’s new targets. But Ursula von der Leyen wants nothing to do with a new common debt instrument. The “roadmap” to be adopted by the Commission on October 16th could be reduced to a long list of proposals already put forward, such as the “anti-drone wall” project being worked on by Defense Commissioner Andrius Kubilius, together with a coalition of about ten countries. A bit too little to be ready to face a Russian invasion in just five years.<\/p>\n
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Before the European Council on October 23rd and 24th, European Union officials and diplomats will race against time to try to adopt the nineteenth sanctions package against Russia. The goal is to reach an agreement by the Foreign Affairs Council on October 20th to be held in Luxembourg. It won’t be easy, particularly for measures in the energy sector. Hungary and Slovakia have already brandished the threat of veto. Thanks to Donald Trump, the new package is somewhat tougher than initially envisioned. After the American president pressured for an end to hydrocarbon purchases, Ursula von der Leyen announced \u2013 among other things \u2013 a ban on liquefied natural gas imports. “Russia’s war economy is sustained by fossil fuel revenues. We want to cut off these revenues,” said the Commission President. However, it won’t be immediate. The phase-out is scheduled for January 1st, 2027, one year earlier than proposed in June. The most effective sanctions could be those targeting the financial and logistical architecture that the Kremlin uses for its war economy. “We will target refineries, oil traders, petrochemical companies in third countries, including China,” von der Leyen said. Another 118 tankers from the Russian shadow fleet will end up on the EU blacklist. There will also be a ban on reinsuring ships carrying Russian crude below the G7 price cap ($47.6 per barrel). Rosneft and Gazprom Neft will be stripped of the exemptions they currently enjoy. China and India are part of the logistical architecture that the Kremlin uses to fuel its war machine. The list of Chinese and Indian companies targeted by the EU for sanctions evasion will expand considerably. The High Representative, Kaja Kallas, announced “additional measures against Chinese actors supporting Russia’s military industry” and a crackdown on technologies and products used in weapons production, “including those received from foreign suppliers that include China and India.” As for the financial architecture that Russia has built over three and a half years to withstand the sanctions imposed by the EU in 2022, for the first time, the EU will sanction cryptocurrency platforms and prohibit cryptocurrency transactions. At the October 20th meeting, foreign ministers will also have to address another issue: sanctions against Israel over the humanitarian situation in Gaza. Not only is there no unanimity to place violent settlers and two extremist ministers from Benjamin Netanyahu’s government on the EU blacklist, but there lacks a qualified majority to approve the Commission’s proposal to reintroduce tariffs against Israel.<\/p>\n
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At its October 16th meeting, the Commission will present two other noteworthy proposals. The first is a “Mediterranean Pact” that should strengthen relations and cooperation with the southern neighborhood. At the top of the EU’s priorities is the fight against irregular immigration. The second is the plan for a European high-speed network. The original idea was contained in the report on the single market presented by Enrico Letta. The following week, on October 21st, the Commission will also present its work program, while on October 29th it will adopt the enlargement package with the opinion on the progress of candidate countries in terms of reforms. On the same day, October 29th, snap legislative elections will be held in the Netherlands, where political fragmentation has made governability an increasingly difficult endeavor.<\/p>\n","protected":false},"excerpt":{"rendered":"
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