Breakthrough in Brussels.
A new plan to fund Ukraine's war with Russia.
We have to fund this gap.
If we don't, Ukraine will lose the war and that's an existential threat to the security of Europe.
But not every nation's pleased.
We consider the option of the reparations loan the worst of all.
It is risky.
It has never been done before.
This is World Business Report from the BBC World Service.
I'm Ed Butler, and today we're going to be examining the EU plan to use Russian frozen assets to secure billions in loans for Ukraine's economic survival.
Will the plan work?
Is it legal?
Also, another brewing conflict between the US and Venezuela, perhaps?
We examine the claim that this one's about oil.
So it is the dawn of a new era.
That's according to the European Commission President Ursula von der Leyen.
She is referring to the deals that she's unveiled in the last few hours, the first of which is to phase out EU imports of Russian gas by 2027.
It's meant to cut Russian revenues that fund the war against Ukraine.
At the same time, she's also unveiling a plan to use frozen Russian assets to secure a loan of more than 100 billion to help finance Ukraine's military and domestic needs.
Today we are proposing to cover two-thirds of Ukraine's financing needs for the next two years.
So this is 90 billion euros.
The remainder would be for international partners to cover.
And since pressure is the only language the Kremlin responds to, we can also dial it up.
We have to increase the costs of war for Putin's aggression, and today's proposal gives us the means to do this.
The scheme is being made possible using emergency powers, so it doesn't require the approval of all 27 EU member states.
Hungary is one country to have consistently opposed this move.
Belgium, which holds the bulk of the frozen Russian assets, also has its reservations.
It wants the EU to borrow the money itself instead, fearing potentially disastrous legal risks for Belgium.
Maxime Prevot is the country's foreign minister.
We have repeatedly said that we consider the option of the reparations loan the worst of all.
As it is risky, it has never been done before.
The letter of my Prime Minister outlined again clearly our concerns.
In short, the necessary guarantees for Euroclear, full mutualisation of the risks and go beyond Euroclear and Belgium.
These are legitimate and reasonable concerns.
Well, Euroclear is where Belgium holds all of these frozen assets.
So let's look at the measures in more detail.
It's taken months, years, in fact, to be reached by the EU bloc.
Tom Keating, the founding director of the Centre for Finance and Security at the Royal United Services Institute, has been telling me how it's going to work.
The big argument, I suppose, on all of this is for the assets that are held in the EU, and that's the majority of the Russian central bank assets, of which the vast majority are held in Belgium.
The big argument has been how can you use those assets in a way which accords with international law and, as the Belgians keep reminding everyone, doesn't expose Belgium to unnecessary legal risk?
And, in short, what I think has finally been agreed is that these assets will be used as collateral assets for loans made to Ukraine to support its defence and its general budgetary requirements.
And Belgium have been the stick in the mud throughout all of this.
And obviously they've now been given sufficient assurances by the EU that they won't be on their own should Russia come knocking in the courts.
And there have been other holdouts, haven't there?
Likes of Hungary and Slovakia, who have been perhaps had a more sympathetic view of Russia, who have also been objecting.
But now under a kind of new EU rules, they no longer have a veto over decisions like this.
Yes, but the big issue throughout the full scale invasion of Ukraine by Russia, the big issue that the EU has faced, particularly on sanctions, is that they have tried to take decisions on a unanimous basis.
So, of course, one country like Hungary, sympathetic to the Kremlin, could scupper all the efforts of the other 26 countries.
And so trying to find ways to operate on a kind of so-called qualified majority basis is the holy grail in the EU.
And obviously they seem to have found a way, by using this emergency power, to do that and thus to circumvent any objections Hungary or Slovakia or anyone else might have to the action that's being proposed.
210 billion euros or up to that amount.
That is a big number when it comes to funding Ukraine.
Well, it is a big number, but I'm afraid the Russian war in Ukraine is a war of big numbers in terms of damage and the cost of defence for Ukraine.
They are talking about 115 billion euros being used to finance Ukraine's defence industry.
I mean, much of that might well also involve spending money in Europe.
So that would benefit Europe for the purchase of weapons and then 50 billion for budgetary needs.
And then there is actually a loan that was made against these assets in 2024 which I think probably needs to be repaid in order to pave the way for a new financial structure, which would need to be repaid.
That's about 45 billion euros.
So a lot of money.
But Ukraine needs a lot of money.
And this only gets paid back to the creditors, whoever they may be, when?
Yeah, so that's the kind of the international law element to this which is essentially what is being said is that this loan will be repaid by Ukraine if Russia pays the reparations necessary and owed to Ukraine when there is finally a resolution to this tragic conflict.
Right, which is something that Russia obviously is resolutely refusing to do, or even countenance right now.
So that would be, doesn't seem like an imminent thing.
Correct.
And so therefore the loan would therefore be repaid out of the assets belonging to Russia.
So I mean Russia has it in its gift to secure the return of its assets that have been immobilised in Belgium by A stopping the war, B returning to its own border and C paying reparations.
If it doesn't do that, well, then the assets stay in Belgium immobilised forever.
We've heard the concerns about these measures, the legal risks for the Belgians, for instance.
Do they still have some basis, I wonder?
Timothy Ash is a strategist at RBC Blue Bay Asset Management.
He's also an expert on Russia at Chatham House.
Well, there are numerous concerns.
One is that it's an attack on property rights and that other States that have a lot of foreign exchange reserves in reserve currencies like the euro or sterling or the dollar would worry that something similar could happen to them and they'd pull those reserves from those reserve currencies and cause a financial crisis.
There's a further concern for Belgium itself though, right?
Because it's thinking, if and when there is a peace deal and indeed sanctions are lifted on Russia, that they will simply be suing Belgium for any lost interest or indeed cash that has been taken from this pot.
Well, there's a possibility of that, but the assets are not being seized.
The assets have been immobilized, not frozen.
And actually three and a half years since immobilization, the Russians have not taken any legal action, probably because there's a risk, if they took legal action, they'd have to lift their own sovereign immunity.
And While they'll be looking to get the 330 billion of Central Bank of Russia assets back, they may be liable to counter suits for the estimated 1 trillion of damage that Russia has done to Ukraine.
So, yes, Belgium's saying that.
It's one of the risks.
It's quite unlikely in practice.
So what about the property argument then, the one that this is a disincentive effectively, to any future foreign sovereign government investing in particularly European banks, because they think oh, it could be me?
I could have my money snatched.
Well, when it comes to sovereigns, you're talking about Saudi Arabia China India, those countries with very large foreign exchange reserves.
The reality is there's around 7 trillion of these reserves and there aren't really any alternatives but to invest in liquid, safe markets like bonds gilts, UK gilts or US treasuries.
They don't trust each other very much.
There's no chance that China is suddenly going to put its foreign exchange reserves in India.
The bigger risk I would argue to the euro and other reserve currencies is if we don't fund Ukraine, because if we don't fund Ukraine it loses the war.
The reality then is tens of millions of Ukrainians will move west.
You'll see massive political, social and economic pressure on Europe.
And Europe will have to massively increase its own defense spending, probably from 2 of GDP to this 5 of GDP target.
What does that mean?
It means higher budget deficits, increased borrowing needs, higher interest rates, lower growth and a weaker euro.
So you think this is the only solution and you think it'll work?
It is absolutely the only solution.
And we've wasted three and a half years doing this when we could have done it right at the start and Ukraine would have been properly funded, properly armed and the war would probably have been over.
And I think it sends a very strong message to other countries that want to break international law that a price has to be paid, that if they invade another country, commit war crimes, a price is to be paid and their assets are in other countries are potentially vulnerable.
We have to fund this gap.
If we don't, Ukraine will lose the war, and that's an existential threat to the security of Europe.
We absolutely have to do this.
We have no choice.
That is Timothy Ash at the Chatham House think tank.
Susan Schmidt, a portfolio manager at Exchange Capital Resources in Chicago, is with me.
Susan also mentioned there.
Europe has this plan to phase out EU imports of Russian gas by 2027, a move designed to cut, of course, Russian revenues that fund the war against Ukraine.
It's taken a while, that decision, hasn't it?
It has, but that's actually good for the energy market because it's not a sudden move.
And so investors have had time to digest this.
The market has also had time to rebalance itself.
Should this route be taken so that there isn't a big disruption anywhere in the supply chain?
That makes for some smoothing in prices for investors, which makes investors happier when there's not a big surprise or shock in price.
Yeah, I mean, I saw that in 2021, 90%, 40% of gas consumed in the EU came from Russia.
It's now, or at least this year, it has been down to 13%.
But that is still a significant proportion of the mix.
It's worth over $15 billion.
Euros annually.
I mean, is there a risk, given how fragile it is, how difficult it is to heat European homes, I guess through a cold winter when you have cut off what was your main staple for heating?
Well, again, when it's a sudden move, it's always a shock.
But this has been a discussion and topic for many years.
As we've seen in that big reduction already, we've managed to segue away from that singular source.
And what it really means is that in the broader picture there's some reshuffling.
It doesn't mean that Russia's not selling that anywhere.
They're rerouting it in different directions.
The supply is coming in from different directions.
That helps.
It also means at such a low level now it's not projected to be a disruption for the market going forward.
Susan Schmidt, thank you very much for now.
You're with World Business Report from the BBC World Service.
Well, let's stick with fossil fuels.
And this time we're looking at the war or potential war that could be facing Venezuela.
President Donald Trump has said that the massive show of force from the US around Venezuela, the Southern Caribbean, is beyond a pressure campaign to force out the Venezuelan president, Nicolas Maduro.
That's in his words.
He's been targeting alleged drug boats, of course, coming from the country with lethal force.
They're delivering narcotics, he claims, to the US market.
It claim that Venezuela denies.
Trump also suggests there is public support for his efforts.
And he said that similar operations if you like military operations on the ground could soon start on land.
Meanwhile, Nicolas Maduro, and indeed the Colombian president have, in the last few days, been claiming that all of this is just a power grab, an attempt by the US president to target Venezuela's oil reserves.
We thought we'd look at that question.
I've been speaking to Francisco Manaldi.
He's an expert in Latin American energy policy based at Rice University's Baker Institute in Texas.
Well, Venezuela has really massive hydrocarbon resources under the ground upwards of one trillion, with a T barrels of oil down there.
But that doesn't mean that all of those are recoverable, technically recoverable or are economically recoverable.
So I think a more reasonable estimate will be still humongous.
It will be, you know, about 100 billion barrels that will make Venezuela among the, say, top five.
One of the top five.
And the truth is that, up to this point, right Pevedesa, the state oil company, is so run down that it's really not pumping out anything like the amount it could be producing.
There is a huge untapped reserve, but it will require substantial investment to get these reserves accessible.
Exactly.
I mean, that will require massive investments and a lot of technology.
And clearly the national company that is completely broke because they have a massive debt.
Their capabilities are very limited.
They would not be able to do that.
So it would have to be foreign investment to get to that level.
Yeah, I mean the likes of Exxon or Chevron or any of those big American companies that might step in.
And I guess that is the suspicion, or the fear, isn't it, of various international leaders, including President Maduro, including the president of Colombia, that this is maybe what's motivating some of these moves for regime change that we're seeing in Washington.
Well, I think the United States today is a net exporter of oil.
So this is not like 20 years ago, 30 years ago, when the United States relied a lot on Venezuela, among many others, for their imported oil.
However, Venezuela does produce a type of oil that is optimized to be refined in the Gulf Coast of the United States.
And so in that sense there is a sort of good reasons why American refiners, for example, would like Venezuela to produce more.
And, as you point out, it's also the case that some of the big American companies, particularly Exxon, Chevron that is already there or Conoco, could become major players in an expansion of production in Venezuela, because they are very knowledgeable on the type of oil that Venezuela has, which is extra heavy oil.
Heavy oil, as you say, it is what they use to make diesel, right?
Asphalt, I believe, gets made with it.
So it's got particular industrial uses and there is a relative shortage of that in the Western Hemisphere.
Is that right?
Yes.
I mean not only the US has a lot of capacity to process this type of crude that produces, as you mentioned, diesel and other heavy oil.
The production in the southern part of the western hemisphere of heavy oil I mean in particular Mexico Colombia, Brazil and Ecuador is actually declining.
And so these refiners are really eager to get more heavy oil.
So there are various incentives, if you like, for Washington to see regime change in Caracas.
So what do you think when you hear people say this is a conflict about oil?
I think if you look at who's driving a lot of the Venezuelan policy is Marco Rubio.
And Marco Rubio, I don't think oil is his principal motivation.
He really has had for a long, long time a perspective that the Venezuelan regime, as the Cuban regime and the Nicaraguan regime, are different geopolitical rivals of the United States that are bringing in China and Russia in the region.
So I'm not saying that oil is not part of the picture, but in the short term oil is not the main motivation.
I don't think.
And by the way, I don't think that oil will bring lower gasoline prices to the U.S.
In the short run, I mean Venezuela's oil. or will dramatically reduce the world oil price.
So I think it's a mix of motivations and oil is part of the picture.
The energy expert, Francisco Monaldi.
The pretty Swiss lakeside city of Lugano has set out to become Europe's Bitcoin capital, hoping to attract businesses and promote the use of cryptocurrency.
You can still pay for everything in Swiss francs there, of course, but in hundreds of shops and restaurants you can also pay in Bitcoin.
The city has even started accepting it to pay for municipal services.
Our reporter John Lawrenson went to check it all out.
In a McDonald's by the lake in the centre of Lugano, a customer orders coffee.
The salesperson holds up what looks like a credit card payment terminal, but which is in fact a special crypto one distributed free to businesses by the town council.
The customer pays contactless from the Bitcoin wallet on his telephone.
0.00008629 Bitcoin it comes to.
A figure constantly changing because of the currency's notorious volatility.
So, is that receipt?
Bitcoin, this purely digital currency that uses encryption to control, manage and issue units, as opposed to so-called fiat money used by central banks or governments.
People often buy it as an investment, a gamble, in other words, on its value going up as opposed to down, as it has quite a lot recently.
But how many even think about using it to buy actual things like a diamond ring or a pizza?
Well, in Lugano it's different.
This July, I have a problem with my bank.
I had to live in Bitcoin only for 11 days.
Mia Liponi runs the Plan B Hub, a meeting place for people who work in the Bitcoin sector.
You can survive here in Bitcoin only.
It's missing public transportation at the moment, which is really important.
Another one is fuel.
Groceries are OK.
Plenty of medical places, but not the dentist.
And another big thing are bills.
You cannot pay bills with Bitcoin.
Although you can pay for municipal services.
If you get a parking fine, you can pay it in Bitcoin.
Yes, you can also pay taxes in Bitcoin.
Which is probably not why Bitcoin enthusiasts move to this town, but still.
I wander along the lakefront and into a park where there's a square block of metal, a plinth upon which stood a statue of Satoshi Nakamoto, the mysterious person who brought Bitcoin into being in 2009.
Playing on the mystery.
The statue, made of slats of metal, is transparent when you look at it from the front.
And it is now completely invisible because this summer some equally anonymous individual or individuals unscrewed it, broke it into bits and threw it in the lake.
Not everyone here, it seems, is keen on crypto.
In front of the empty plinth I get talking to a few passers-by like Lucia.
I personally don't use any cryptocurrencies, so I don't feel like it impacts me at all.
But I do find it surprising that institutions such as my university would promote it so much.
I think it's associated to crime, to the dark web and speculation like cryptocurrencies in general.
A lot of people lose their money because they invest in it and then it crashes.
I asked the mayor, Michele Folletti, if he is concerned that Lugano will become a mafia magnet.
No, because mafia people are more interested to use fiat for money laundering.
And the risk for Switzerland is this, with the Swiss franc, not with the Bitcoin.
When they sell drugs or something like this, they receive fiat money, not Bitcoin, because the most anonymous is the cash.
You can use fiat money to do something good or something bad.
The same with Bitcoin.
Lugano is though, a Bitcoin magnet, with almost 110 crypto sector companies moving or starting up here.
John Lawrenson, reporting from Lugano.
There's more on that in today's edition of Business Daily.
Now, Susan Schmidt of Exchange Capital Resources in Chicago is still with us.
In the markets today, Susan, private payroll data has been released.
What's the significance of this?
What are we hearing?
So private payroll data comes up today.
It came out and it was a loss of 32,000 jobs.
So the significance of that is it indicates that a softening labor market is indeed happening.
Investors are taking that as a sign for the Federal Reserve, the U.S.
Central Bank to put pressure on them to lower interest rates another quarter of a percent at their next meetings.
OK, well, watch out for that.
A quick final question for you before you go.
What has been your most downloaded song this year?
Most listened to and downloaded for me on Spotify is APT by Rosé and Bruno Mars.
Excellent choice.
Now, I heard this was your choice.
It had me dancing around the studio.
I'm delighted to hear that from you.
The reason we're talking about this, listeners you're probably all wondering is is because Spotify, the streaming giant, the world's favourite streaming platform, has just released Spotify Wrapped.
It's the annual summary that provides fans with a personalised summary of their listening habits.
This is the sort of fun fact that you can extract about your own listening habits if you have a Spotify account.
Total minutes listened, top songs listened to, how many times you streamed each one of your top favourite tracks.
It also reveals that the Puerto Rican star, Bad Bunny, has been the world's most played artist of 2025, with more than 198 billion streams.
Joining me to discuss all of this and, of course, much more Olivia Jones, a music researcher for Media Research.
Hi, Olivia.
Tell me, is this becoming a big thing, the moment when Spotify tells us what we like?
Don't we know it already?
I think that this is a really big cultural moment because I feel like we have been missing these types of big kind of water cooler moments on streaming.
Of course, in the early to mid 2010s, we had these like exclusive album drops and things like that.
But I feel like, as fragmentation has kind of accelerated, we have really missed out on those moments.
So Spotify wrapped feels like the last big cultural moment on streaming.
So i think a lot of people are drawn to that community aspect where it's often telling them something that they already know, but it's kind of the excitement of sharing it with everyone else.
Yeah, it's only once a year, isn't it once a year?
A mirror um, ever since the hit parades vanished uh, the hit parades of olden times uh, this is how we measure where we're at um, Names that stood out for you.
We've got Lady Gaga and Bruno Mars.
They had the world's biggest song, apparently, with their throwback duet Die With A Smile.
Obviously more numbers on people like Taylor Swift, Bad Bunny, Olivia Deen, Morgan Wallen, Lady Gaga K-pop, Demon Hunters of course, a big name this year.
Yeah, I think that was really interesting that we found kind of a movie soundtrack for K-pop, Demon Hunters really taking over as one of the top albums.
I think it had that kind of universal appeal where many thought of it as just another kids movie.
But there have been, you know, family fans, adult fans.
It's kind of taken over everyone.
And it was kind of one of those albums of the year moments.
Yes, indeed.
Meanwhile, UK fans chose Alex Warren's Ordinary as their top track of the year.
So you can check that one out if you're curious.
It tells you your listening age, this.
Now, I didn't know about this.
Do you know how old you actually are, Olivia, based on your musical taste?
I'm 76, apparently.
I'm not 76, but I am according to Spotify.
Yes, according to Spotify, I am 82, which is thanks to much of the jazz music that I listen to while working.
Well, you and I alike, it sounds like.
Olivia, thank you very much indeed.
That's it for today's edition of World Business Report.
I hope you enjoyed what you heard.
Stay with us.
A new summary is coming up.
