A few steps from the shopping boulevards and the city center of Brussels, in a harmless hustle and bustle, is the financial institution which holds the keys to the company which could unveil one of the most transcendental decisions of the European Union in a very short time. Euroclear, a little-known Belgian institution for liquidation and custody of securities, is now in the spotlight. This organization houses Russian funds worth 193 billion euros, mainly belonging to the Central Bank of Russia, immobilized since 2022 due to Kremlin sanctions following the invasion of Ukraine. The EU is debating whether to give Ukraine more than 92 billion of the Russian sovereign funds it holds in the form of a “reconstruction loan” to keep the country afloat.
The decision, encouraged by the European Commission and by countries such as Germany, and which will be the focus of the European summit in the coming years in Brussels, represents a qualitative leap in the EU’s sanctions policy and against Russia. With this initiative, Europe regains its prestige. “Let’s make no mistake. If we don’t succeed, the EU’s capacity for action will be seriously damaged for years to come,” declared German annuller Friedrich Merz at night in Berlin.
But both Euroclear — a company that manages the channels of the foreign exchange market, where stocks, sales and border transactions flow, ensuring that everything works — and Belgium, the country where this entity has been based for decades to seek its ownership rights, among Europe’s largest guarantors, oppose it. propose.
Meanwhile, kyiv’s European partners clung to the idea. Against a backdrop of highly adjusted assumptions, ensuring that this is the only viable and rapid formula to launch a financial lifeline for Ukraine at a crucial time. The EU is currently debating complex legal mechanisms to try to unblock the proposal and convince Belgium and a few other countries which, like Italy, do not understand this idea at all. Neither Bulgaria nor Malta satisfy. Your favorite option? The common struggle, which comes up against the frontal rejection of Germany and the Netherlands.
The route continues its course. Last week, a majority of EU states approved an unusual emergency mechanism, designed for crises or natural disasters, which allows these funds to be frozen indefinitely (instead of having to renew the sanctions that neutralize them every six months) and to do so, moreover, by majority rather than unanimously. This was an extremely important first step to have this money and avoid the veto of Kremlin-linked partners, such as Hungary.
Coming of age in Brussels will be a veritable gathering of hot leaders. The Belgian government claims that this financial rescue plan in favor of kyiv could be extremely damaging on the ground for its country, as well as for the entire European market and its prestige. And that the European formula could open a crisis and create a precedent for making similar decisions with other global players whose funds are in the custody of Euroclear or other financial institutions. Countries like China, India and other countries with large reserves in Europe are watching developments closely.
Russia’s demands
Russia, which has filed complaints against the Belgian entity for damages and violations of its power to dispose of its funds, warned that if the Euroclear bank opened up countries like France, which also have Russian funds in private banks, and if these funds were available to Ukraine, it would consider this as a “ground for war”.
Euroclear, which manages 42.5 billion euros in deposits, remains largely silent. Its general director, Valérie Urbain, assured in an interview with The World It has been a month (one of the rarest cases pronounced) which does not exclude taking the EU to court in the event that the legal scheme chosen to use frozen Russian sovereign assets involves their confiscation.
From this conversation, it is clear that Urban, who wears guards, like his entire family, due to the threats received, fears for the future of his entity. “We are a crucial effort which must remain infallible for the stability of financial markets,” I said in the French daily.
The prison rises above Belgium. Member State representatives are analyzing the latest legal proposal from the European Commission which seeks to guarantee the Belgian government that risks will be shared whatever happens.
Until now, the use of these Russian means has been distinct. Last year, the EU allowed the revenue generated to be used to provide a large loan to Ukraine. However, what is proposed is unprecedented. The EC executive’s idea is to use the cash balances of Russian assets to provide a loan to Ukraine at an interest that only Russia would have to pay for the damage caused at the end of the war. In exchange, Member States would provide a guarantee.
In addition, a three-pronged network is offered to Belgium: this country can access funding equivalent to the entire package if it faces legal demands or retaliation from Moscow; who can count on this financing, regardless of the total financial guarantees that each EU country offers; and that the money will only be transferred when the guarantees are in force, according to diplomatic sources.
The Veintisiete also discussed the proposal that all countries that have already concluded bilateral investment treaties with Russia (like Spain, for example) would terminate them simultaneously. However, this does not prevent possible retaliation from the Kremlin, because these agreements have temporal clauses in force which maintain the protection regimes.
From a political point of view, the mayor has his hands in the caja. The idea is not only to throw this financial lifeline to Ukraine, but to increase the symbolic element: that Russia can foot the bill for the damage. However, not all economists and experts are convinced by this formula.
Ursula García, founding partner of finReg 360, a law firm specializing in financial regulation, warns that to take the step of asset seizure, you need to have “solid legal support”. This element is key for her. It is not possible to open the door to litigation in international courts for many years with uncertainty over the outcome for a key financial markets institution.
For Judith Arnal, researcher at the Elcano Institute, there are “very significant legal doubts in both dimensions”. “In public international law, there is the principle of sovereign immunity which protects the assets of States, even in sanctions contexts. If the EU has legally immobilized these assets through sanctions, making the decision to mobilize the principal, on the basis of revenue, enters into more legally uncertain territory and could expose itself to challenges before international courts,” he points out.
“From Belgium’s point of view, the problem is even more concrete: Euroclear, as an entity domiciled on Belgian territory, maintains the contractual legal obligation to return assets to their legal owner, who continues to operate at the Central Bank of Russia. If the EU accepts payments of these balances and remits them to Ukraine, Belgium becomes the jurisdiction where it would crystallize a reimbursement obligation of 185 billion euros in the event of the lifting of sanctions, thus exposing it to possible Russian retaliations of a cyber, energetic or other nature,” added Arnal.
The researcher from the Centro de Estudios de la Política Europea has just prepared a proposal with the director of this think tank which is based solely on the use of income from fixed assets, creating an extraordinary financial tool which “avoids touching the main assets, considerably reduces the legal and geopolitical exposure of Belgium and relies on conventional financial instruments that the markets understand perfectly”.
Arnal — and other analysts like Wolfgang Münchau — emphasize that this is the first step to establish the Commission without being able to further assume a “precedent that erodes the confidence of other central banks (on Russian soil) to maintain significant euro reserves in European infrastructures (like Euroclear), thus weakening the attractiveness of the euro as an international currency.”
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