Jens Asbjørn Bøgen
The question of reparation loans for Ukraine has caused a deep divide in the European Union.
Speaking in Brussels ahead of a meeting of EU foreign ministers, German Europe Minister Gunther Krichbaum said governments rejecting the so-called reparations loan should expect market consequences.
He argued that refusal could directly affect how investors view those states.
“Any country that now rejects this proposal for a reparations loan must also be aware that this is likely to have a negative impact on its credit rating,” Krichbaum told journalists.
€210 million on the line
While he did not outline a formal alternative, the European Commission has previously mentioned joint EU borrowing or bilateral grants as possible fallbacks to the €210 million scheme.
Krichbaum cautioned that those options would not come cheaply.
“Interest rates would then rise, creating a vicious circle if national member states actually implement budget cuts,” he said according to Euractiv.
Diverging views
German Chancellor Friedrich Merz has been one of the strongest advocates of the loan, pushing back against joint borrowing at a time when public finances across the EU are under strain.
Other leaders have taken a sharply different stance. Belgian Prime Minister Bart De Wever has warned of major financial risks linked to using Russian assets, a concern also raised by Euroclear, the Brussels-based clearing house that holds most of the funds.
In a letter sent last month to European Commission President Ursula von der Leyen, De Wever said investors could see the plan as a form of confiscation, with knock-on effects for borrowing costs.
“Investors are likely to demand higher premiums to compensate for the increased risk of expropriation,” he wrote, adding that this could threaten financial stability and even “destabilising the euro itself.”
No concensus
Krichbaum’s comments come as EU leaders, including von der Leyen, European Council President António Costa and foreign policy chief Kaja Kallas, seek agreement on the loan at a leaders’ summit on Thursday.
However, progress has slowed. Italy, Bulgaria, Malta and Czechia have all pressed for deeper discussion of alternatives, despite German warnings about their cost.
Sources: EU officials, national government statements, Euractiv
