Updated 2.40pm with government reaction
Malta has joined Belgium, Italy and Bulgaria in pushing the EU to find alternatives to using Russian billions to help finance Ukraine.
In a joint declaration seen by Times of Malta, the four member states urged the EU Commission and the European Council to look for alternative options “presenting significantly less risks,” than the current plan being discussed to help Ukraine.
The countries said they remained “fully committed to continuing to provide Ukraine with regular and predictable financial support in the long term” and also favoured keeping Russian assets frozen “until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by its war.”
The Commission wants to use €210 billion in frozen Russian assets as a loan to Ukraine and has proposed invoking an emergency clause in EU treaties – Article 122 - to do so.
Article 122 allows member states to approve the loan through a qualified majority of EU member states – 15 countries representing 65% of the bloc’s population – instead of unanimity.
That is crucial to the EU’s plan, given the expectation that Viktor Orban’s Hungary will move to block any attempt to aid Ukraine in its war against Vladimir Putin’s Russia.
But the Commission’s plans have run into major opposition from Belgium, which worries it risks being sued for hundreds of billions of euros by Russia if the loan is approved, given that the vast majority of the frozen Russian funds are held at Euroclear, a Belgium-based clearance house.
An indefinite asset freeze
And on Friday, Italy, Bulgaria and Malta lent weight to Belgium’s position by also expressing concern about the Commission’s plan.
The four backed an EU plan to indefinitely immobilise Russian assets on the basis of Article 122, meaning member states will no longer need to renew that asset freeze every six months.
However, they expressed reservations about applying Article 122 to then loan the frozen money to Ukraine.
Using Article 122 to release funds “implies legal, financial, procedural, and institutional consequences that might go well beyond this specific case,” the countries warned in their joint statement.
Hungary and Slovakia voted against the EU proposal to freeze Russian assets indefinitely.
Malta's concern
In Malta’s case, the concern is that the workaround being adopted in this case could set a dangerous precedent that will end up undermining the unanimity rule that underpins many member state negotiations.
Specifically, the concern is that Article 122's qualified majority voting provisions could in the future end up being applied to other matters concerning the EU's Common Foreign and Security Policy (CFSP).
"Malta intends to help as much as possible, but it wants to ensure that the parameters established by the EU treaties are respected," a person familiar with negotiations told Times of Malta.
In their joint declaration, the four countries said they want the EU to explore options involving “an EU loan facility or bridge solutions,” to finance Ukraine.
The Commission had previously suggested something similar – financing a loan to Ukraine by issuing new EU debt. But the plan ran aground amid concerns about it requiring unanimity and the already-high debt burdens of some key member states.
It is now arguing that its Article 122-based freeze of Russian assets is "exceptional" and will not set a precedent. The measure "is a consequence of the unprecedented and critical situation that the Union and its Member States are confronted with," it argued in its official position.
Commission technocrats want member states to agree on the financing plan at a European Council summit slated to take place on December 18 and 19.
Governments are expected to negotiate intensely in the days leading up to that summit, with meetings also planned for this Sunday.
Not opposing Ukraine support
A government spokesperson said Malta's approach should not be misconstrued as opposition to supporting Ukraine.
"On the contrary, it reflects a commitment to ensuring that EU action remains predictable, credible, and firmly grounded in EU and international law, thereby strengthening the Union’s collective support for Ukraine," the spokesperson said.
The government said Malta’s position within the EU is guided by respect for international and EU law, and by the need to ensure that measures adopted are legally sound, sustainable, and preserve the institutional balance on which the EU's decision-making rests, particularly when exceptional instruments are involved.
