Copyright kyivpost
It was disappointing to wake up to the news that EU leaders failed to agree on the Reparations Loan (RL) concept at their meeting in Brussels on Oct.23. If I were a cynical SOB, I might quip that if you had held your hands to your ears, you might just have been able to hear the champagne corks popping in the Kremlin and the offices of Euroclear in Belgium. But, as I am sure, readers would appreciate, that’s not me. That said, if I were the Russians, I would not be putting some additional bottles of champagne on ice just yet. Needs must for Europe. And the basic calculation for Europe is this: that if it does not fund Ukraine via the immobilized CBR [Central Bank of Russia] assets route, it faces two much more costly options: a) Funding the $100-150bn annual cost of supporting Ukraine by tapping their own taxpayers for this sum, or; b) Not funding Ukraine and risking its defeat and a Russian victory. The latter would mean an existential, and very immediate, threat to European security from tens of millions of Ukrainians moving West, a destabilized and militarized Ukraine, and a rampant and expansionist, and aggressive Russia moving West. And it will move West. Likely in that scenario, European defense spending would need to move quickly through the gears from the 2% of GDP and change spent at present to the 5% of GDP maintained through the Cold War and set now as a long-term target spend for NATO members. To put that in pounds, that is an extra €1 trillion per year for Europe. Imagine what that means for budget deficits in Europe. It means higher taxes, larger financing needs, higher interest rates in Europe, lower growth and grist to the mill of the far right. That is the biggest threat to the Euro not the scaremongering by Belgium on the risk from using immobilized Russian assets in the defense of Ukraine and Europe, to the reserve currency status of the Euro. I still find it astonishing that Belgium, a country that has free rode on other NATO members’ security backstop for years - serially spending far less than 2% of GDP on defense - and is now one of the lowest per capita aid givers to Ukraine, and is still sitting on billions in interest on the immobilized CBR assets for the period since the full scale invasion to the first quarter of 2023, again seems to expect the German taxpayer to pick up the tab for supporting Ukraine in the war by blocking the plan to use immobilized CBR assets for Ukraine. Apologies to Belgians for my lack of diplomacy, but I am not a diplomat. Belgium would no doubt respond that it requests for burden and risk sharing are fair - and I kind of agree, which begs the question why the other European countries are balking therein. To note here that Europe faces the choice of either opting now to spend their own taxpayers’ money to support Ukraine or use frozen assets with the slight, very distant possibility that their taxpayers might have to eventually pay similar totals to compensate Russia. Why would they not take the option of not spending their own taxpayers’ money now? Are they literally idiots? Now Europe is not awash with leaders at present, but I think the maths as above is so obvious, such a no-brainer decision, that I still think Europe will eventually, kicking and screaming, figure out that there is no other way now but using immobilized CBR assets to fund Ukraine. Without using immobilized CBR assets Ukraine faces a huge financing gap, which cannot be filled any other way, and it risks losing the war. It is that stark a choice now.
