Another Freeze

The EU’s inability to agree on using Moscow’s frozen €200 billion central bank assets to provide more support to Ukraine exposes the limits of the bloc’s willingness to pool risk and marshal collective financial firepower for strategic ends.

Belgium’s prime minister, Bart De Wever, has made clear that his country will not shoulder the legal and financial risks alone. Brussels fears that a Kremlin lawsuit to fight the expropriation would leave Belgian taxpayers holding the bag for any damages awarded. Euroclear, a private entity, lacks the balance sheet to absorb such a potential liability, and Belgium’s experience during the 2008 financial crisis—when its banks, including Fortis, collapsed under the weight of broader European liabilities—still looms large.

Belgium’s concerns about the legality and implications of seizing Russian funds are shared by others. Some fellow member states and the European Central Bank worry that seizing sovereign assets could undermine confidence in euro-denominated securities and trigger capital flight from non-EU investors. But the prospect of putting to use the €200 billion in Russian assets held by Euroclear, a private company, is too juicy to pass up.

International law protects sovereign assets, making outright seizure legally fraught even if the EU has found a creative way to redirect windfall profits from the frozen holdings. The proposed workaround, a loan backed by the assets without technically confiscating them unless Russia fails to pay reparations, has gained traction as a way to bolster Ukraine’s financial needs. Yet the scheme requires unanimous approval by the bloc’s member states.

The legal finesse offers a possible path forward, even if it requires magical thinking that Russia will pay reparations and not sue to reclaim assets. Such a suit against Euroclear could bankrupt the company, whose annual income was €2.9 billion in 2024. Even Belgium’s total 2024 budget was only €317 billion. If Europe wants to access these frozen assets, Belgium is demanding that the associated risk must be shared.

But if the EU cannot collectively absorb the risks of unlocking €200 billion for Ukraine, how can it hope to tackle more ambitious projects, such as a capital markets union or a defense union? These initiatives require far greater political will and institutional trust than the current debate on frozen assets.

Europe has demonstrated a capacity for financial solidarity. During the COVID-19 pandemic, the EU issued €750 billion in joint debt under the NextGenerationEU recovery fund. Post-2008, it created the European Stability Mechanism and the European Financial Stability Facility to stabilize the eurozone. These were landmark moments of burden-sharing that showed what the EU could achieve when pushed to the brink.

The bloc now seems paralyzed. The political capital required to use the frozen Russian assets, despite broad agreement on the moral imperative, is being squandered in legal hedging and national self-interest. Europe dithers, even as Ukrainian President Volodymyr Zelenskyy pleads for action and Trump administration support has waned.

Collective European political will exists as long as national interests do not erode it. But the EU’s fragmented response to the assets issue reflects deeper structural weaknesses. Without a unified fiscal framework or common financial instruments, Europe remains underleveraged as it fights for greater competitiveness, defense autonomy, and global influence.

Europe has the tools, the legal pathways, and the moral justification to unlock the Russian assets. What it lacks is the courage to distribute the associated risk. That failure could cost Ukraine and Europe as a whole. As Zelenskyy has warned, delay limits Ukraine’s defense and slows the EU’s own progress.

Ukraine will now wait until December to see if funds will be released. "It is possible to solve all the technical issues. That means that this solution is feasible," European Council President Antonio Costa announced after a recent meeting on the Russian assets. For Ukraine’s sake, and that of the EU, projecting unity and acting decisively should be nonnegotiable.