EU set to immobilise Russian assets; Belgium wary

Here’s the money question we keep getting in classrooms: can Europe use Russia’s frozen cash to keep Ukraine’s lights on and its soldiers paid? On Friday 12 December 2025, Russia’s central bank sued Euroclear in a Moscow court over those immobilised funds, while EU capitals raced to lock the freeze in place for the long term. The timing matters because EU leaders are due to take big decisions next week.

Euroclear is the Brussels‑based firm that settles trades for investors around the world. Since sanctions in 2022, it has held the bulk of Russia’s central bank reserves stuck in the EU. The total immobilised in Europe is about €210bn; roughly €193bn of that sits on Euroclear’s balance sheet after many Russian bonds matured into cash. Interest on those cash balances has been flowing to the EU, which began directing “windfall profits” to Ukraine in 2024.

Why push now? Ukraine’s budget needs are huge. European officials estimate financing requirements at around €135bn over two years, and the EU wants to cover a large share if allies agree. One Commission blueprint is a so‑called “reparations loan” of about €90bn for 2026–27, backed by the income and cash balances from the frozen assets rather than seizing the principal outright. Germany backs the approach and has signalled it could provide hefty guarantees.

There is also a politics lesson to sit with. U.S. security help dipped sharply this year after President Donald Trump paused military aid in March, leaving Europe to shoulder more of the load. That gap explains why EU capitals are searching for predictable, multi‑year money for Kyiv instead of passing the hat every few months.

Belgium is the hold‑out you should watch. Prime Minister Bart De Wever says he supports Ukraine but won’t accept a plan that could land Belgian institutions with massive liabilities if Russia retaliates. He has set conditions on risk‑sharing and legal cover and has not ruled out going to court if those conditions aren’t met. In parliament this week he called the current design “unwise” unless every risk is shared EU‑wide.

Euroclear, for its part, warns that forcibly using the cash it holds could spook markets. Chief executive Valérie Urbain has told Belgian media that the proposal risks destabilising a system that clears trillions for global investors. She argues any solution must protect Euroclear if Moscow later wins damages in a Russian court. That’s why Belgium keeps asking for watertight safeguards before signing off.

The EU is trying to provide exactly that legal shield. Ambassadors are set to back an emergency move under Article 122 to immobilise Russia’s central bank assets indefinitely, ending the need for six‑monthly renewals. Brussels also says institutions are “fully protected” and points to an offset tool: if Russia grabs Euroclear’s assets in Moscow, Euroclear could offset losses against assets of Russia’s own clearing house held inside the EU. The aim is to spread risk across the bloc, not leave it on Belgium alone.

Moscow’s counter‑claim is simple and sweeping: it calls the EU plan illegal and a breach of sovereign immunity for central banks. That is the argument behind Friday’s lawsuit against Euroclear and Russia’s warnings of retaliation if Europe proceeds. Legal scholars think such claims could drag on, but they add to the pressure on EU leaders to dot every i before the summit.

If you’re teaching this, a quick glossary helps. “Immobilised” means the assets are frozen in place and can’t be moved; they are not confiscated. “Windfall profits” are the interest earned on the cash pile while it sits frozen; EU law since May 2024 directs those net profits to Ukraine. “Sovereign immunity” is the rule that protects a state’s central bank assets from seizure-hence the EU’s focus on using income and loans rather than outright expropriation.

What happens next is all about dates. EU governments aim to lock the indefinite freeze now and decide on the financing model at the 18 December summit. If the “reparations loan” stalls, a fallback is raising money on capital markets with the EU budget as guarantee-an option that needs unanimity and could be vetoed by Hungary or others. Layered on top are U.S. peace proposals that could seek to route frozen billions differently, which is why Brussels wants the assets legally tied down first.

Finally, a fairness note you can discuss with students. President Volodymyr Zelensky argues Russia’s blocked funds should help rebuild what Russia destroyed-and European leaders say using proceeds now is a lawful way to get help to Ukraine without crossing the line into confiscation. Whether the EU can balance law, markets and wartime urgency will be the test of the coming week.