Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.
I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I am drilling down on two issues: a crucial month for the EU's Ukraine funding and a preview of the OSCE ministerial in Vienna.
Briefing #1: Could The EU Agree On A Reparations Loan For Ukraine Before 2026?
What You Need To Know: If there's one way European Union officials feel they can get a seat at the table when it comes the settlement of the war in Ukraine, it is via the 176 billion euros ($204 billion) of Russian frozen assets currently held inside the bloc and how that can be leveraged both politically and economically.
Last month, the EU saw itself largely bypassed when the United States presented a peace plan that was "refined" once US and Ukrainian diplomats met in Geneva a few days later.
European officials, speaking to RFE/RL under condition of anonymity, say they have succeeded in removing some of the original text's ideas related directly to Ukrainian membership in the EU and NATO.
But Europe has a golden ticket up its sleeve that could secure it a spot at the negotiating table: funding for Ukraine.
Having committed "to covering the financial needs of Ukraine for 2026 and 2027," European Commission President Ursula von der Leyen recently gave member states three options for getting an estimated 140 billion euros to Kyiv over the next two years.
With the United States reluctant to commit any new money for Ukraine, the EU's willingness to step up has become crucial for Kyiv as Russia's full-scale invasion nears its four-year anniversary.
The first option spelled out by von der Leyen in the paper is for individual member states to give Ukraine the cash. In the second, the European Commission would raise the necessary funds on the financial markets.
But it's the third option -- a reparations loan leveraging frozen Russian sovereign wealth assets in the EU -- that is the most popular, as it wouldn't directly hit the pockets of EU taxpayers.
It's not that straightforward, however.
Deep Background: Firstly, time is running out to decide, and Belgium, where most of these assets are frozen, still opposes the move. Then there's the United States, which in its original proposal also expressed interest in obtaining a large part of the funds.
Von der Leyen told the European Parliament on November 26 that she couldn't "see any scenario in which the European taxpayers alone will pay the bill" for Ukraine and that she was ready to present the legal text for the reparations loan.
According to RFE/RL sources, the European Commission is currently working on as many as 11 legal acts when it comes to the loan, and there is plenty of frustration in EU capitals that have yet to see concrete details of how the plan would work.
A European Commission official told RFE/RL that the original idea was to first secure political backing for the reparations loan when EU leaders gather at an EU summit in Brussels on December 18. The finer points would be ironed out early next year to allow the money to start flowing to Kyiv by the second quarter of 2026.
There's also a fear that national diplomats and lawyers would get bogged down in details and derail any chances of a deal if the legal acts are presented too soon.
Drilling Down
- Belgium, which hosts the financial markets company Euroclear where most Russian bonds are frozen, wants to see proper guarantees from other EU member states as it expects a legal retaliation from Moscow. To shoulder claims of 140 billion euros from Russia -- an amount that is one-third of Belgium's annual GDP -- would be a disaster for the country.
- In a letter seen by RFE/RL addressed to von der Leyen on the topic by Belgian Prime Minister Bart De Wever, he once again spelled out his concerns. "While l have full sympathy for the argument that the European taxpayer should not be the only one picking up the tab for the financial support of Ukraine, the brutal legal reality is that at no moment in history have immobilized sovereign assets been 're-purposed' during an ongoing war," he wrote. "Such assets have been the object of decisions during post-war settlements, usually in the context of war reparations by the losing party."
- The European Commission, however, still believes an agreement can be made in December if enough EU member states make legally binding guarantees to back the reparations loan based on their gross national income (GNI). This means smaller -- and more skeptical -- countries such as Hungary and Slovakia can opt out as their total share of EU GNI is miniscule.
- But the other wealthier and larger European countries need to be onboard to share the costs. And Brussels hopes other non-EU G7 countries could chip in, as well.
- "If the European Council were to be called upon to decide on a reparations loan scheme at its upcoming meeting, it will only be possible on the basis that all the concerns expressed above are adequately and fully covered," De Wever wrote at the end of his letter to Von der Leyen. This includes a full guarantee to be provided by willing member states enabling Euroclear to maintain liquidity of the assets for their total amount."
- But the Belgians aren't the only obstacle to be overcome. There's also the "American angle," as some EU officials put it. The original 28-point US peace plan noted "$100 billion in frozen Russian assets will be invested in US-led efforts to rebuild and invest in Ukraine" and that "the US will receive 50 percent of the profits from this venture."
- This wording truly rattled European politicians and diplomats alike, especially as they had envisioned that the money given to Ukraine in the shape of a reparations loan to a large extent would be used by Kyiv to buy European-produced weapons.
- EU officials say most parts of the original US proposal have been watered down or taken out completely, but they admit that any final document could change considerably and they aren't privy to the latest discussions on the wording.
- While the EU would want the reparation loan to be a European project, most diplomats concede it is essential to keep Washington onboard -- and happy. That could mean being open to the idea of the United States getting some of the funds or at least Ukraine using the cash to buy American arms.
- Crucially, though, Brussels also has to ensure that the United States continues to pressure Hungary into agreeing to the rollover of EU sanctions, which include the frozen Russian assets, every six months.
- In July, when it was time to renew the measures, Hungary didn't threaten a veto, and this was largely due to American pressure. Brussels hopes the United States will play that same role when the sanctions need to be extended again in January.
Briefing #2: A Lavrov-Rubio No-Show As OSCE Ministers Gather In Vienna
What You Need To Know: The Organization for Security and Cooperation (OSCE) will gather in Vienna for its annual ministerial meeting on December 4-5. And while up to 40 foreign ministers from the 57 member states are expected to come to the Austrian capital, the headline will be that the two most watched members won't make an appearance: US Secretary of State Marco Rubio and his Russian counterpart, Sergei Lavrov.
The lack of high-level representatives from Washington and Moscow, coupled with the expectation that the OSCE will once again fail to pass a budget or agree on which country will chair the club going forward, means the question marks over an organization celebrating its 50th birthday this year will continue to grow.
The main talking point ahead of the Vienna meeting was that Lavrov would make an appearance and whether countries supportive of Ukraine would react to his presence with pre-arranged walkouts during his speech or a boycott of the event by their representatives.
Lavrov usually comes to these meetings, having only been barred by Warsaw from attending the ministerial in the Polish city of Lodz in 2022. He was allowed to attend subsequent gatherings in Skopje and last year, arriving in the European Union for the first time since the full-scale invasion of Ukraine, brought a large Russian delegation to Malta.
Deep Background: European officials have even told RFE/RL that one of the reasons the meeting was moved from Finland -- which chairs the OSCE this year -- to the OSCE's home turf in Vienna was for Helsinki to avoid the diplomatic embarrassment of having to invite the Russian minister.
The more official explanation, of course, is it's a cost-saving exercise for the cash-strapped organization as Vienna hosts all the organization's critical infrastructure such as its secretariat.
The first hint of a Lavrov no-show came on November 18 when Russia surprisingly shifted its speaking slot for the ministerial from early in the agenda to a lowly 46th position. This came after trading places with Belarus in order to address the forum as early as possible.
It is now believed Lavrov will instead travel to India, which OSCE diplomats tell RFE/RL Moscow currently sees as strategically more important than the OSCE.
Drilling Down
- This comes as a blow to an organization that until recently prided itself by being the only (largely) European forum in which both Belarus and Russia still were members and treated on equal footing with other European nations.
- For some time, there was even hope in Vienna that a Rubio-Lavrov meeting at the sidelines of the ministerial meeting would make OSCE play an increased role in the settlement of the war in Ukraine. OSCE was, after all, one of the venues in which Russia raised some of its concern in early 2022 before launching the full-scale war.
- Deputy Foreign Minister Alexander Grushko will now head the Russian delegation, while the Americans might only be represented by "a senior official from the European bureau of the State Department," according to a diplomat with insight into the planning of the event.
- The diplomat also added that a reason for this is that the OSCE currently isn't a foreign-policy priority in the current American administration.
- The United States is also pushing for a cut of the proposed OSCE budget by 10 percent and an internal reform of the organization -- a complication as Washington has long been the single biggest financial contributor to the OSCE.
- Switzerland, which will take over the chair of OSCE in 2026, has tried but so far failed to find the necessary unanimity among the 57 member states for a new budget. The last regular OSCE budget was adopted in 2021, and no one expects a new budget to be agreed anytime soon with the organization still set to continue to survive on "in kind" contributions from largely Western European countries.
- The issues with the unanimity rule and its limitations for OSCE don’t stop there. While it was agreed last year that Switzerland will take over from Finland as chair on January 1, 2026, no decision has been made on a chair country for 2027. And the Vienna meeting is again unlikely to break that deadlock. So far, Cyprus is the only official candidate, and the island country enjoys wide support, including from all its fellow EU member states. But Turkey has put in a veto, given the longstanding political tensions between Ankara and Nicosia.
- There might be some debate on this at the meeting in Vienna, especially as Cyprus last year lifted its veto over the Turkish candidate Feridun Sinirlioglu to become the new OSCE secretary-general. But so far there is no indication Turkey will give a green light for Cyprus.
Looking Ahead
On the eve of the OSCE summit, NATO foreign ministers assemble in Brussels on December 3 for the military alliance's last ministerial of the year.
Expect quite a few announcements about military aid to Ukraine and a discussion of what sort of relationship NATO should have with Russia going forward as talks between Kyiv, Washington, and Moscow continue this week on a potential settlement of the war in Ukraine.
That's all for this week!
Feel free to reach out to me on any of these issues on X @RikardJozwiak, or on e-mail at jozwiakr@rferl.org.
Until next time,
Rikard Jozwiak
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