EU Frozen Russian Assets: Why Belgium and Allies Blocked Seizure as Ukraine’s Deficit Hits €23B

The EU is not short of a potentially transformative source of funding. Around $300 billion, or roughly €210 billion, of Russian Central Bank assets were frozen across Western jurisdictions after Russia’s full-scale invasion of Ukraine. Most of the European-held assets - roughly €190 billion to €210 billion - sit with Euroclear, the Brussels-based financial clearinghouse.

The difficulty is turning frozen ownership into usable capital.

European legal frameworks provide strong protection for foreign central bank property. Sovereign immunity makes the direct seizure of such assets fundamentally different from redirecting profits generated by them. The EU has been willing to take the latter step. It has not been willing to cross the former line.

That distinction explains much of the current impasse.

Belgium, which sits at the centre of the dispute because of Euroclear, is unwilling to assume unilateral responsibility for the consequences of confiscating the principal. Belgian Foreign Minister Maxime Prévot has made the position clear: Belgium does not want to bear the legal or financial exposure alone if Russia later succeeds in seeking restitution through international courts.

Brussels is therefore demanding that all 27 member states share the risk before the principal can be touched.

This is more than a dispute over Belgian caution. It exposes a basic weakness in the EU's approach: political responsibility is collective, but legal and financial liabilities are not necessarily so.

France and Germany have also opposed confiscating the principal, pointing to sovereign immunity, risks to the euro and possible disruption to global financial markets. Their position has helped turn what was once presented as a question of how to make Russia pay into a much narrower question of how much risk European governments are prepared to assume themselves.

Europe has chosen borrowing over confiscation

The alternative has been to build increasingly elaborate financial mechanisms around the assets without actually taking the assets themselves.

The first major step was to use the income generated by the immobilised Russian funds. Under the Ukraine Loan Cooperation Mechanism, interest proceeds are redirected towards Ukraine-related financing. The European Commission released another €1.4 billion tranche on August 5, bringing transfers through the mechanism to €8 billion.

It is significant money, but it is not remotely equivalent to controlling the principal.

The second pillar is the €90 billion Ukraine Support Loan for 2026-2027. The package provides €60 billion for military procurement and €30 billion for general budget support. Rather than being funded directly by Russian reserves, it is financed through common EU borrowing, backed by the EU budget.

That arrangement solves one political problem while creating another.

The cost and guarantee ultimately sit within the European system. European taxpayers are therefore exposed to the debt and its interest costs while the Russian principal remains immobilised but legally protected.

The imbalance is particularly stark because the choice is not between helping Ukraine and doing nothing. The EU is already committing substantial resources. On August 24, the European Commission disbursed €6.1 billion, focused on air defence, as senior European leaders visited Kyiv for Ukraine's Independence Day. European Council President António Costa also promised to examine ways of accelerating later loan tranches.

But Ukraine's immediate needs are larger. President Volodymyr Zelenskyy said Kyiv faces a €23.5 billion shortfall beyond expected assistance and called for faster access to the next instalments of the existing €90 billion programme.

The issue, then, is not whether Europe is supporting Ukraine. It is whether the existing machinery can move money quickly and at sufficient scale when the largest potential source of financing remains politically untouchable.

The fault line inside the EU

The argument is also exposing a growing divide between governments that see confiscation as a necessary extension of the war effort and those that regard it as a dangerous precedent.

Sweden has been particularly vocal. Foreign Minister Maria Malmer Stenergard has criticised the decline in bilateral assistance to Ukraine and the growing dependence on common European borrowing. Sweden has pledged to push the asset question back onto the EU agenda before 2027.

The Nordic and Baltic position is driven by a different calculation from that of Belgium, France or Germany. For governments closer to Russia geographically and politically, leaving Russian state reserves intact can look less like prudent financial management and more like a failure to make the aggressor bear the costs of the war.

That disagreement matters because bilateral aid is itself changing.

As individual member states reduce direct national commitments and rely more heavily on EU-level borrowing, the political responsibility for Ukraine's financing becomes increasingly collective. So does the financial liability. What is presented as European solidarity also becomes a mechanism for distributing the cost across the bloc.

For countries pushing confiscation, this is precisely the wrong direction. They want Russia's assets to carry more of the burden. Instead, European institutions are creating instruments that allow the burden to be shared among European states.

The compromise that cannot yet command consensus

The European Commission has tried to bridge the gap with a Special Purpose Vehicle designed to isolate the frozen assets and distribute legal exposure across all 27 member states.

The logic is straightforward: if Belgium is the central legal battleground because Euroclear holds most of the assets, a structure that spreads the risk could make the proposal more politically acceptable.

But the SPV has not secured unanimous backing.

That matters because the proposal does not eliminate the underlying legal question. It changes where the risk sits. Governments must still decide whether they are prepared to accept collective exposure to litigation and potential financial claims linked to Russian sovereign property.

The obstacle is therefore not simply technical design.

It is the absence of agreement over how far the EU should go in using its financial infrastructure as an instrument of geopolitical power.

A precedent Europe is reluctant to set

The frozen reserves sit at an awkward intersection of war finance, international law and the credibility of European financial markets.

The EU has already demonstrated that it is prepared to immobilise Russian sovereign assets and redirect the income they generate. Confiscating the principal would be a much more consequential step. It could expose European financial institutions to unprecedented litigation and force governments to confront questions about the protection of sovereign assets held in their jurisdictions.

For Belgium, Euroclear is the immediate pressure point. For larger European economies, the issue extends further: how far can the euro-based financial system be used against a state without undermining confidence in the system itself?

This is why the dispute cannot be reduced to a contest between governments that support Ukraine and governments that do not.

Belgium, France and Germany are not rejecting European support for Kyiv. They are drawing a line around the legal and financial risks they believe Europe should not absorb. Sweden and the Baltic states are arguing that refusing to cross that line leaves Russia's resources underused and transfers too much of the cost to Europe.

Both positions contain a strategic calculation. The problem is that they point in opposite directions.

The bill is moving into Europe’s budget

The consequences will extend beyond the immediate financing of Ukraine.

The EU's long-term budget negotiations will take place against a backdrop in which common borrowing is already carrying a larger share of the war's financial burden. The €90 billion Ukraine Support Loan relies on the EU budget's available headroom, while future support will compete with other priorities for limited fiscal capacity.

That makes the frozen-assets dispute inseparable from the next argument over the Multiannual Financial Framework.

Every euro raised collectively for Ukraine is also part of a broader debate over how much financial risk the EU can mutualise, how much room remains under its common budget and which member states are willing to provide guarantees. The more difficult it becomes to use Russian principal assets, the more important those questions become.

For Ukraine, the distinction is immediate. The €210 billion remains largely where it was, while Kyiv is asking Europe to accelerate loans to close a €23.5 billion gap.

For the EU, the deeper question is whether preserving the legal architecture around its financial system is worth accepting a much larger fiscal role for European governments in financing the war.

That is the strategic limit the asset dispute has exposed: Europe can immobilise Russian wealth, tax the returns and borrow against its own collective credit. It is still unwilling to decide whether the principal itself can become an instrument of war finance.