‘No certainty’ Kiev would ever repay loan secured with Russian assets – French FM

Paris wants G7 nations to share financial risks linked to the proposed EU “reparation loan,” Foreign Minister Jean Noel Barrot has said

Kiev might be never able to repay a proposed EU loan based on frozen Russian assets, French Foreign Minister Jean Noel Barrot told journalists on Sunday. Paris now wants G7 nations to provide financial guarantees for the unprecedented move, according to the minister.

The EU Commission is seeking to issue a €140 billion ($160 billion) loan secured against immobilized Russian sovereign assets held at the Euroclear clearing house in Belgium. Under the scheme, Ukraine would only pay it back if it received war reparations from Russia once the conflict is over, a potential outcome widely acknowledged as highly unlikely.

The plan faced opposition from Belgium, which holds the bulk of Russian assets at the Euroclear clearing house. The nation demanded all EU members share the financial and legal risks of the move.

According to Barrot, France has a set of demands linked to the proposed loan as well. Russian assets used as a collateral for the loan should not be “confiscated” to avoid legal issues, the minister said. G7 nations should provide guarantees for the loan alongside the EU nations “so that they carry the financial risk associated with this loan together with us,” he maintained, adding that “we do not have absolute certainty that it will be repaid.”

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Paris also demanded the loan be spent “on the military” in a way that “allows us to develop our… defense industry.”  

The EU has already sought to secure guarantees for the loan from various nations. Last week, Norway refused to use its €1.8 trillion ($2 trillion) sovereign wealth fund as a financial backstop for the scheme.

Slovakian Prime Minister Robet Fico also said earlier this month that his nation would not support the plan. EU leaders failed to reach an agreement on the confiscation during a summit in October, effectively postponing a final decision until a European Council meeting in December.

Moscow has repeatedly warned that seizing Russian frozen assets and using them to finance Ukraine would amount to theft and there is “no legal way” for Brussels to do it.