The FT has learned of concerns in Europe over the plan to use Russian assets.

The European Commission's proposals to use Russia's frozen reserves for a loan represent the boldest plan yet to support Ukraine, the Financial Times reports. According to the publication's European diplomatic sources, this boldness indicates a weakening willingness among EU countries to continue financing Kyiv from their national budgets.

"If you ask me whether we are heading straight into a wall, the answer is 'yes,'" said a senior EU official.

The FT notes that the proposal, unveiled yesterday, relies on powers provided for natural disasters to permanently immobilize Russia's sovereign assets. Thus,  the European Commission has found a way to circumvent any veto threats from politicians like Hungarian Prime Minister Viktor Orbán, and with it, the principle of unanimity in foreign policy that has existed since the signing of the Treaty of Rome, which established the European Economic Community in 1957.

"This is incredibly complex on a number of legal points. But it's so important that I think they'll insist. They'll do it because it's a war," commented Jean-Claude Piri, former Director -General of the Legal Service of the Council of the EU.

Accepting the proposal to use Russia's frozen reserves, which sources say has sparked disagreement among EU lawyers, will almost certainly create legal challenges, the FT writes. "Of course, it will be challenged; no one is under any illusions. It will certainly be challenged in court, and it's entirely possible to win. The situation doesn't look good, but there are no other options left," a senior EU official stated.

The legal mechanism underlying the European Commission's proposal has been used to respond to the eurozone debt crisis and the COVID-19 pandemic , but has never been applied to security policy matters, which must be decided unanimously by EU member states, the newspaper notes. "It's madness, and I don't understand why they think they can get away with it. It's unclear whether member states will approve it, but such a precedent could have far-reaching consequences," one of the FT's sources noted.

The European Commission has officially proposed two options for financing Ukraine to EU countries in the coming years: borrowing on the financial market with guarantees from the EU budget, or issuing a "reparations loan" from frozen Russian assets. The maximum loan amount is €210 billion, and the funds will be disbursed until the end of 2030. EC President Ursula von der Leyen stated that the decision could be made by a qualified majority, meaning that 15 of the 27 EU countries would need to vote in favor. According to Politico, EU leaders will discuss the issue on December 18.

Moscow has repeatedly warned that it will consider any actions with its foreign assets "theft" and will respond to them, defending its interests in the courts. In late November, the State Duma appealed to the government, calling for the development of countermeasures in the event of the EU seizing Russia's frozen assets. The Ministry of Finance noted that such a draft was already prepared.

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