Europe is faced with one of its most critical choices since the Russian attack on Ukraine. There are about €210 billion of Russian sovereign assets frozen across the entire European Union, of which €183 billion are held by Euroclear, headquartered in Brussels. This choice aims to assess Europe’s financial solidity over the next few years. The Europeans were very divided, confused, and terrified of the Russian response when they met at the Brussels session on 18 December. Hence, they delayed their much-hyped plan to tap the Russian frozen assets.
The strategic appeal
Ukraine faces a significant funding gap, and this year it needs $51.5 billion to finance its budget deficit, which accounts for 25 per cent of its 2025 budget. Several leaders of European countries, however, believe that tapping Russian assets and profits can help alleviate the burden on European taxpayers, proving that aggression carries economic costs.
Belgian Foreign Minister Maxime Prévot described his nation’s view that the loan for reparations is “risky and unprecedented,” and that it favors more traditional market borrowing. However, it has also been argued that this move would strengthen a deterrence policy in Europe, signaling that violating international law could result in the depletion of a state’s national wealth.
Belgium’s central dilemma
Belgium received €1.7 billion in these corporate taxes from Euroclear’s earnings on frozen Russian assets in 2024. However, under the EU’s new system, these earnings would go directly to Ukraine, bypassing Belgium altogether. Prime Minister Bart De Wever said, “A whole lot of these funds are immobilised in Brussels, at Euroclear,” and added that “it is not so easy, legally, to get these funds.”
“Belgium fears becoming solely responsible financially if Russia strikes back or if international courts decide that using these assets is illegitimate,” a news agency reported, adding: “Belgium wants a clear commitment to shared responsibility among EU states.” A press agency added, “For de Wever, it’s ‘not acceptable to use the money and leave us alone with risks.”
Hungary’s tough opposition
Hungarian Prime Minister Viktor Orbán asserted that “any action on the frozen Russian state assets is a declaration of war, since withdrawing hundreds of billions of euros from a state has never gone unanswered in the course of history.” Orbán also said that his government maintains its own foreign reserves in Belgium and asked whether “this money is in the right place.”
Orbán recently declared victory, asserting, “The president of the European Commission announced this morning that the commission stepped down, and the question will not be discussed at the December summit.” However, this was later contested.
Russian threats of retaliation
“The confiscation of Russian assets on EU territory will have negative consequences,” Russian President Vladimir Putin threatened in November, with Foreign Minister Sergey Lavrov chiming in, “The situation with frozen assets demonstrates that theft is in the blood of Europeans.”
Russia has already filed an initial lawsuit against Euroclear for compensation. An estimate by the Kyiv School of Economics states that the Russia-based assets of around $127 billion for US, EU, and UK firms are potentially liable for counter-seizure. Russia may also choose to adopt punitive policies against European firms operating in Russia, limit the export of vital commodities, or escalate the diplomatic and legal disputes.
United Kingdom’s position
Although the Belgian authorities hold the bulk of frozen assets, other countries also hold large amounts. At the end of May 2025, the UK Office for Financial Sanctions Implementation had £28.7 billion in assets frozen in response to sanctions imposed on Russia, excluding sovereign assets. The UK has provided Ukraine with £2.3 billion via the G7’s $50 billion loan facility, supported by asset earnings, a distinct model compared to the EU’s reparations loan.
Challenges involving international laws
At the international level, there are legal guidelines that govern the seizure of a country’s property. The UN Convention on Jurisdictional Immunities of States and Their Properties, adopted in 2004, clearly indicates that each country has immunity from the jurisdiction of another country. However, some international jurists have argued that seizure may constitute a ‘countermeasure’ to encourage Russia to fulfill its international obligations.
The UN General Assembly has declared that “Russia must bear the legal consequences of all its internationally wrongful acts, including making reparation for the injury.” The problem is that Russia has a veto power within the UN Security Council, which halts any joint international response. There is no legal precedent, so European leaders fear creating harmful precedents that may target Western holdings down the road.
The path forward
The European Commission is still urging a deal between the 27 member states. The Commission’s President, Ursula von der Leyen, announced that the EU would grant Ukraine €90 billion to cover its budget needs in 2026-27, with frozen Russian assets serving as collateral for the loan. However, the EU is internally divided over the deadline for such a deal.
Other countries that oppose using frozen assets to support their military efforts include Italy, Bulgaria, Malta, and Slovakia. Actually, the Czech Republic has recently joined this group. Even the United States reportedly advises European countries to refuse this type of reparations loan because they ought to keep their frozen resources for a future peace agreement.
Conclusion
Europe finds itself at a crossroads where right is clouded by law and economic prudence. The move aims at more than just financing Ukraine; rather, it is about understanding the parameters that define the strength and integrity that Europe exudes. One miscalculation by the EU may lead to a division in Europe’s unity and spark a nuclear exchange by a European antagonist who chooses to fight back with economic warfare. Regardless of which route Europe takes after this week’s summit, the ripple effects will be seen for decades.
READ: The unmasking of an illusion: Britain’s reckoning and America’s last stand
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.