A key proposal is to use Russia’s frozen assets held in EU institutions, notably Euroclear in Belgium, to fund a “reparations loan” and bolster Ukraine’s economy with around euro 90 billion in support. Russia objects, calling it theft, and has started a court challenge in Moscow against Euroclear.

Russia’s total frozen assets in the EU amount to about euro 210 billion, with roughly euro185 billion managed by Euroclear. The EU has previously only paid the windfall profits (about euro 3.7 billion in 2024) from these assets, but now seeks to legally mobilize the principal as part of Ukraine’s reconstruction needs. The plan includes guarantees to Belgium to shield it from potential losses, given that Euroclear would be used to loan money to the EU, with any shortfall offset by Russian asset reserves. Belgium’s central concern is legal risk and potential fallout if the plan collapses or imposes significant costs on its economy (Belgian GDP around euro 565 billion). Belgian Prime Minister Bart De Wever has demanded conditions and has not ruled out action against the plan if risks are too great. A major concern is whether using Euroclear to loan EU money would violate banking regulations and place Belgium on the hook to bail out Euroclear.

EU officials are weighing two main options to provide Ukraine with euro 90 billion: (1) raise the money on capital markets backed by the EU budget, a plan favored by Belgium but requiring unanimous EU approval, which is difficult due to opposition from Hungary and Slovakia; and (2) loan Ukraine directly from the frozen Russian assets. The plan to immobilize Russia’s central bank assets in Europe indefinitely, via an EU-wide agreement under Article 122, is a pivotal step to reduce the need for unanimous renewals and reassure Belgium. Seven EU members, including Baltic states, Finland, and Poland, urge quick action, arguing the plan is both fiscally feasible and politically prudent. There is broader concern about how the US plan might interact with Russia’s frozen assets, as some US proposals have floated using the assets for reconstruction with a mixed profit-sharing arrangement. An EU source indicates that immobilizing the assets indefinitely strengthens Europe’s position, though final decisions will still require consensus among member states. (BBC)