A new push led by Sweden, the Netherlands, Spain, Poland, and the Baltic states aims to channel €210 billion in immobilised Russian Central Bank assets into financial support for Ukraine. According to reports from Euronews, the campaign immediately collided with opposition from Belgium, which hosts the bulk of the funds at Euroclear in Brussels and fears ruinous litigation and financial exposure.
The Belgian Roadblock and the Threat of Litigation
Belgium holds the vast majority of the €210 billion through central Brussels securities depository Euroclear. According to Belgian Foreign Minister Maxime Prévot, who spoke this week, the country’s opposition has not changed. Prévot stated that using these assets through a process amounting to confiscation entails very significant risks. Last year, Belgium led efforts to dismantle a plan that would have turned the funds into a zero-interest credit line for Ukraine, and the nation vows to resist similar moves now. Euroclear is currently battling an active lawsuit inside Russia, heightening official concerns in Brussels over unpredictable legal dangers.
Shifting Custodianship to the European Union
To bypass Belgian liability, a proposal gaining traction across European capitals involves moving the sovereign assets from Euroclear into a new custodian owned and controlled directly by the European Union. Ukraine’s Finance Minister Sergii Marchenko told Euronews that transferring the custodian of frozen assets from Belgium to the European Union would help settle everything and mitigate risk. Marchenko noted that this setup avoids the complex structure of national guarantees and offset mechanisms designed by the European Commission, replacing them with a joint responsibility where all 27 member states sign a single accord.
Legal Mechanisms and Historical Precedents
Proponents of the shift include Hugo Dixon, commentator-at-large at Reuters; Lee Buchheit, honorary professor at the University of Edinburgh Law School; and Daleep Singh, vice chairman at PGIM and former Biden administration official. Through their project, The Russian Transfer, they recommend invoking emergency powers under Article 122 of the EU treaties. This article requires a qualified majority and was previously used to immobilize the assets indefinitely. According to the project’s backers, the custodian would not be a corporate entity domiciled in a single targetable state, and Belgium would receive a mandated EU indemnity for slim risks. Proponents point to a March 2003 precedent where the White House ordered the transfer of $1.7 billion in Iraqi sovereign assets to a special account at the Federal Reserve Bank of New York.
Alternative Structures and the European Stability Mechanism
Karel Lannoo, chief executive at the Centre for European Policy Studies, has pitched an alternative scenario utilizing a Special Purpose Vehicle (SPV). Under Lannoo’s proposal, the SPV would hold the entire bulk of Russian assets but use exclusively their extraordinary revenues—generating about €4 billion per year—to back bond issuances, leaving the €210 billion principal untouched. The European Stability Mechanism, created in 2012 as a permanent firewall for the eurozone, features a maximum lending capacity of €500 billion, would provide the necessary guarantees for the bonds. While the European Commission mentioned an SPV in a past options paper, it warned that such a structure carries higher funding costs than traditional common borrowing.
Did you know? Article 122 of the EU treaties, which proponents suggest using to establish a centralized EU custodian, requires a qualified majority vote among member states and was previously deployed to immobilize the Russian Central Bank assets indefinitely.
Reputational Risks and the European Central Bank
Despite interest in the custodian concept, significant hurdles remain regarding international law and financial stability. Last year’s plans stalled over fears that foreign investors would view the move as the confiscation of sovereign assets, triggering a mass relocation of funds and a reputational crisis for the eurozone. During previous negotiations, European Central Bank President Christine Lagarde privately advised leaders to tap the assets alongside other Western allies rather than singling out the eurozone. The ECB ultimately declined to provide emergency liquidity for national guarantees, and officials remain wary of any high-risk proposal that could undermine the euro.
Frequently Asked Questions
Where are the immobilized Russian assets currently held?
The bulk of the €210 billion in immobilized Russian Central Bank assets is held at Euroclear, a securities depository located in Brussels, Belgium.
Why is Belgium opposed to using the frozen funds?
According to Belgian Foreign Minister Maxime Prévot, using the assets amounts to confiscation and exposes Belgium to unpredictable dangers, ruinous litigation, and active lawsuits filed in Russia against Euroclear.
What is the proposed EU custodian solution?
Backed by figures like Ukraine’s Finance Minister Sergii Marchenko and project leaders behind The Russian Transfer, the proposal suggests moving the sovereign assets from Euroclear into a new custodian owned and controlled jointly by all 27 EU member states under Article 122 powers.
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