The European Commission will invoke “emergency powers” to raise up to €210bn for Ukraine using frozen Russian state assets, in a move that could bypass the need for unanimous approval by member states and sidestep vetoes by countries like Hungary and Slovakia, the Financial Times reported on December 5.

The latest version of Brussels’ scheme to make a Reparations Loan, allows the Commission to unlock an initial €90bn backed by Russian central bank assets with more raised later.

The idea is that Kyiv would not be required to repay the loan unless Russia pays reparations for damage caused by its invasion of Ukraine. The proposal, if enacted, would mark a significant shift in the EU’s legal and financial architecture by enabling sanctions-related decisions without the bloc’s usual unanimity requirement.

“Europe will remain [Ukraine’s] strongest and most steadfast partner… we can equip them with the means to defend themselves and lead peace negotiations from a position of strength,” said European Commission president Ursula von der Leyen.

She added, “The message to Russia is that the reparations loan is increasing the cost of war for Russia and invites Russia to the negotiating table to finally find peace.”

However, the Reparation Loan is facing stiff opposition from Belgium, where the bulk of the frozen assets are held by securities depository Euroclear. Legally unprecedented, Belgium worries that Russia can successfully sue and get all the money returned. Belgium would be entirely liable to make the payment and is insisting the rest of the EU share the risk – something the other member states refuse to do, leaving Belgium to bear the entire risk alone.

To secure the loan, EU countries would be required to provide national guarantees. The Commission’s legal proposal would prevent the transfer of assets “to or for the benefit of the Central Bank of Russia”, using emergency powers under Article 122 of the EU treaties — a clause typically reserved for responses to natural disasters or exceptional circumstances.

Belgium, where €185bn of the frozen assets are held, has questioned if the need to fund Ukraine qualifies as a true “EU emergency” as Ukraine is not a member of the EU and Europe itself is not physically involved in the war. Other critics complain that von der Leyen is twisting the EU rules and undermining the basis of the EU treaty that demands unanimity on all major decisions. For example, EU rules preclude bankers from making a loan they know will never be repaid. Russia has made it clear that it does not intend to pay any reparations, which is not even an item on the current 28-point peace plan (28PPP) under discussion with the White House and Kremlin.

“It is never ideal to make a decision that is supported by only a smaller group of member states,” a Belgian official said, warning that “scenarios remained that will require the immediate availability of the full amount”.

The European Central Bank has also objected to the plan. ECB president Christine Lagarde said on December 2 that the proposal was “something that stretched [and] that hopefully is in compliance with international law”.

“Our duty is also to defend the currency, the euro, and to make sure that the international law principles are respected,” she said. “If we want to secure Europe as a centre where the rule of law applies, we should not start by violating the rule of law.”

Anticipating a failure to get approval of the Reparation Loan idea, von der Leyen has also floated two alternatives: member states make bi-lateral loans to Ukraine to raise the billions it needs to stay in the war; or the EU collectively issues debt to raise the money. Both ideas are highly unpopular with the majority of the member states.

EU leaders are expected to discuss both proposals at a summit later this month.