EU risked 'economic war' had it used Russian assets for Ukraine loan, Abela says

Had the European Union agreed to use €210 billion worth of Russian frozen assets as a loan to Ukraine, Malta would have faced “serious financial repercussions,” Robert Abela said.

The prime minister was giving a ministerial statement in parliament on Wednesday about a European Council summit that took place in December, which he described as being one of the hardest decisions he has taken as a prime minister.

During this summit, EU leaders struck a deal to provide a €90 billion loan to Ukraine. This was far from the original proposal to use €210 billion in frozen Russian assets as a loan for the war torn-country.

The original proposal ran into major opposition from Belgium, which is concerned it could be sued for hundreds of billions of euros by Russia if the loan was approved, given that the vast majority of the frozen Russian funds are held at Euroclear - a Belgium-based financial market infrastructure.

Prior to the council's summit, Malta, along with Italy and Bulgaria, lent support to Belgium's position.

Many countries, especially those facing economic challenges, viewed the commission’s initial proposal as if it were a “silver bullet”, Abela said.

However, after speaking to the Belgian prime minister before the summit, Abela realised that if Europe had to agree on the reparations loan, all member states would be exposed to unlimited financial repercussions, and Europe would have entered an “economic war” with Russia.

“If Russia’s sovereign assets were used for the reparations loan, Russia would have retaliated immediately against the sovereign assets of all member states,” he said. “The day after, we would have faced serious repercussions, maybe some of the worst Europe has ever seen.”

The prime minister insisted that, despite Malta contributing to the loan to Ukraine, Malta’s neutrality will be respected, and none of Malta’s financial contributions will go towards weapons.

Leader of the Opposition Alex Borg began his counter address by expressing solidarity with the Iranian people amid reports of people being killed.

Borg praised the EU’s decision to support Ukraine and pointed out that the large sum of €90 billion reflected the scale of the challenge the country was facing.

But he stressed that Malta’s neutrality must always be respected and given primary importance during these discussions.

When speaking about the situation in the Middle East, Borg reiterated the PN’s position that the only solution to this crisis was a two-state solution where the “Palestinians and Israeli people can live in peace”.

However, first and foremost, he insisted that people should have access to humanitarian aid. He warned against this being politicised.

During these conflicts, he said that Malta should push for dialogue, as it has always done in the past.

Looking ahead, he spoke about the EU’s upcoming budget - the Multiannual Financial Framework – and highlighted the importance of EU funds for Maltese citizens and businesses.

In response to Borg, the prime minister also expressed solidarity with Iran, adding that Foreign Affairs Minister Ian Borg was working towards implementing sanctions against Iran.

While Abela said he was pleased to hear that Borg agreed with the €90 billion loan, he said that hours before the council took its decision, Borg voted against the €90 billion loan, in favour of the reparation loan.

During a meeting with the European People’s Party, the European political party the Nationalist party forms part of, Borg voted in favour of a motion that was in favour of using immobilised Russian assets.

“God forbid we followed the decision the leader of the opposition voted for. Had we not done so on December 19, the EU would have entered into an economic war with Russia."

“I understand that it is not easy to go against the giants of Europe, and that is not what the leader of the opposition wanted, but that is what we did,” he said.