Belgium's Legal Hurdle: A Historical Lens on EU Cohesion

The immediate decision at Thursday's summit is a test of EU unity. The core investor question is whether Belgium's legal concerns can be overcome to secure a €90bn loan for Ukraine. The plan is a complex financial engineering feat: the EU would borrow from Euroclear to provide Ukraine with an initial €90bn loan, about two-thirds of Kyiv's funding needs for 2026 and 2027. This would be funded by the €210bn of Russian central bank assets largely held by Euroclear in Brussels. The critical deadline is clear: Kyiv's coffers risk depletion by April 2026.

Belgium's opposition centers on a multibillion-euro legal liability. The country argues that using the assets would be seen as confiscation, leaving it exposed to claims if Russia sues Euroclear. While EU courts would not recognize a Russian judgment, Moscow-friendly jurisdictions could seek to enforce any claim against Belgian assets abroad. Belgium insists it will not accept the plan without cast-iron guarantees from other EU countries covering 100% of any claims.

This legal risk is the primary friction. The Commission has offered concessions, including instructing all EU countries to end bilateral investment treaties with Russia to limit Belgium's exposure. Yet, Belgium and its allies argue this is not enough. The alternative, joint EU debt, is politically fraught. It requires unanimity, meaning Hungary's Viktor Orbán could block it. Germany and its allies, however, insist there is no real alternative to using the Russian assets, framing it as a necessary step to end the war.

The bottom line is a high-stakes gamble. A deal would provide a crucial lifeline to Ukraine, but it would fracture the bloc's legal and political consensus. A failure would signal the EU's inability to act decisively on an existential challenge, potentially undermining its credibility and leaving Ukraine's shattered finances hanging by a thread.

The Mechanics: Legal Guarantees vs. EU Borrowing

The EU's financing plan for Ukraine hinges on a fundamental trade-off between legal feasibility and political practicality. The assets-based plan, which leverages frozen Russian state assets, is the more legally straightforward path. It requires only a qualified majority of 15 out of 27 member states representing at least 65% of the EU population. This threshold is designed to be achievable, but it is not without friction. Belgium's legal fears center on the unlimited liability for Euroclear if the guarantees provided by other member states are insufficient. For Brussels, the risk is not just financial but reputational and geopolitical, as it fears being left exposed to Russian retaliation.

The alternative, joint EU debt, is politically fraught. It requires unanimous support from all member states, a near-impossible hurdle given Hungary's explicit threat to veto further EU aid. This mechanism has long faced historical opposition from Northern European countries wary of fiscal union. Belgium's push for this option is a strategic move to bypass the legal and political constraints of the assets plan, but it is a long shot. The Commission and Council's lawyers have already rebuffed a Belgian pitch to trigger an emergency clause to override vetoes, deeming it legally unviable.

Belgium's position is defined by non-negotiable legal preconditions. It insists on unlimited guarantees from other EU countries to protect Euroclear and its government. This demand is a direct response to the perceived risk of unlimited liability under the assets plan. Furthermore, Belgium wants all member states to end their bilateral investment treaties with Russia to ensure it isn't left alone to face Moscow's wrath. These demands highlight the core tension: Belgium seeks to shift the legal and financial burden onto the entire bloc, but other countries are reluctant to make such sweeping commitments.

The bottom line is that the assets plan is the only viable path forward given the current political landscape. It is a legal mechanism that can work, but it is not a perfect solution. The Belgian demands expose the fragility of the guarantees and the potential for future disputes. The joint debt option, while theoretically appealing for its simplicity, is a political dead end. The EU is therefore forced to proceed with a plan that is legally sound but carries significant, unresolved risks that could undermine its long-term stability.

Historical Precedent: The Eurozone Crisis as a Warning

The current impasse over Ukraine aid is not an anomaly. It is a direct replay of the deep-seated fiscal divisions that nearly broke the eurozone in 2012-2013. Then, as now, a north-south rift over shared debt threatened to paralyze the bloc. The historical precedent is clear: when northern fiscal conservatives, led by Germany, opposed bailing out southern debtors, it created a precedent for deep-seated resistance that can stall even existential European efforts. The current standoff, where Germany along with Nordic and Eastern European countries say there is no alternative to that scheme while facing hardening resistance from Belgium and Italy, mirrors that old conflict. The core question remains the same: can the EU overcome its internal fiscal fractures to act collectively?

The proposed workaround-using emergency powers under Article 122 to bypass unanimity-is a legal innovation born of desperation. It echoes past battles over crisis measures, where legal challenges were a common tool to delay or derail action. In this case, the idea has already been rebuffed by the Commission and Council's lawyers as not legally viable. This is a critical vulnerability. A workaround that lacks legal certainty is a weak foundation for a multi-billion-euro financial commitment. It risks a protracted legal battle that could unravel the deal before it is even signed, just as legal and political wrangling stalled eurozone solutions for years.

The ultimate risk is a fragmented EU response. The plan to carve out Hungary and Slovakia from a joint debt scheme points toward a core group of 25+ nations funding Ukraine while others opt out. This is a recipe for strategic and economic weakness. A divided Europe, with a core acting while others stand aside, would be less credible on the world stage and less effective in managing its own economic influence. The eurozone crisis taught a harsh lesson: fiscal unity is not optional for a political union. When the bloc fractures over funding, it doesn't just delay a bailout; it undermines the very cohesion that makes the EU a global player. The current crisis is a warning that the same divisions, if allowed to harden, could fracture the EU's ability to act decisively on its own security and economic future.

Catalysts, Risks, and the Path Forward

The immediate catalyst is the European Council summit on December 18th. This high-stakes meeting will determine the fate of a €210 billion loan to Ukraine, with a qualified majority vote required for approval. The clock is ticking, as the EU's 27 leaders gather in Brussels to decide whether to use frozen Russian assets to finance Kyiv's war effort through 2027. The outcome will be a direct test of the bloc's political will and its ability to act collectively on a matter of existential importance.

The primary risk to the funding plan is a deal breakdown. Belgium's adamant opposition, backed by Italy, Malta, and Bulgaria, has created a critical impasse. The Belgian government fears it would be left alone to face legal retaliation from Russia if the frozen assets are used. A failure to reach consensus would leave Ukraine without critical funding, exposing the EU's inability to act decisively. This would be a severe blow to the bloc's global credibility and its stated commitment to supporting Ukraine, potentially fracturing the alliance at a moment of acute crisis.

A potential compromise is emerging, but it may not satisfy the core demand. The European Commission has offered legal assurances that Belgium could access the full €210 billion if it faces claims, and instructed all EU countries to end bilateral investment treaties with Russia to share the risk. This points toward a limited, capped guarantee for Belgium. However, this may not resolve the fundamental legal dispute. Belgium's demand for "unlimited" protection remains unmet, and the compromise does not address the deeper north-south divisions over joint debt that torpedoed EU unity during the eurozone crisis. The path forward appears to be a narrow, 25-country agreement that excludes Hungary and Slovakia, but this fragile coalition could still unravel at the last minute.

The bottom line is one of high-stakes negotiation under pressure. The summit is the final decision point, but the underlying tensions are structural. A deal, even a limited one, would be a victory for unity. A breakdown would be a stark signal of the EU's limits, with consequences that extend far beyond Ukraine's war-battered economy.