Belgium’s rejection rests Europe’s resolve on Ukraine aid

A Bloomberg opinion piece examines the growing tension within the European Union over how to use the roughly $300 billion in frozen Russian assets held since the 2022 invasion of Ukraine — a debate that has now reached a critical juncture as Belgium resists a new proposal to use the funds as collateral for a massive loan to Kyiv.

Most of these assets are held at Euroclear Ltd., a Brussels-based financial clearinghouse that has become an unlikely focal point of global geopolitics. While Western allies have so far avoided outright seizure of Russian assets — preferring legally safer “workarounds” — their halfway approach is increasingly strained.

The proposed €140 billion loan, endorsed by German Chancellor Friedrich Merz, aims to provide a much-needed financial lifeline to Ukraine without technically violating international norms.

The plan’s legal framework, Bloomberg explains, involves lending the frozen Russian central-bank assets through a zero-coupon bond, with repayment linked to future Russian reparations. The loan would be guaranteed by EU countries and other partners, under conditions that “should abide by international law, preserve financial stability and ensure solidarity,” according to people familiar with the European Central Bank’s position.

This approach, Bloomberg argues, would allow Europe to mobilise frozen funds for Ukraine without crossing the politically charged red line of asset confiscation. So far, the preferred mechanism — taxing the interest earned from Euroclear’s reinvestment of the immobilised cash — has generated about €5 billion for Kyiv.

However, Belgium’s government is balking at the new plan. Prime Minister Bart De Wever sees the project as fraught with both political and economic dangers.

Belgium, as Euroclear’s host nation, fears bearing the brunt of Russian retaliation — from cyberattacks to potential capital flight by other state investors such as China or Saudi Arabia. Moreover, De Wever worries that fellow EU members’ loan guarantees are far from airtight, leaving Belgium exposed to financial risk. Euroclear’s major shareholders, many of them Franco-Belgian institutions, could also face fallout if the clearinghouse’s neutrality were compromised.

The opinion piece highlights how these domestic and institutional anxieties intersect with Belgium’s internal political pressures. 

De Wever’s fragile “Arizona coalition” is struggling to finalise a budget, and Euroclear’s windfall profits from frozen Russian assets have conveniently boosted Belgium’s fiscal position. Transitioning to the new zero-coupon structure, the article points out, would end this windfall — removing a valuable source of revenue at a delicate time for the government.

Still, the commentary insists that Belgium’s stance shouldn’t be dismissed as obstructionism.

De Wever is not a Viktor Orban figure and the Belgians aren’t known for their dramatic vetoes, Bloomberg writes, noting the country’s legitimate concerns over financial stability. Euroclear’s CEO, who reportedly travels under armed protection, has warned of potential systemic risks.

Meanwhile, other EU states like Luxembourg and the Netherlands have voiced similar apprehensions, citing asset seizures and ongoing legal claims.

The current impasse underscores the need for a more robust and unified European response. The article calls for revisiting the guarantees and solidarity mechanisms behind the loan proposal, a case of putting cart before horse, and widening participation to spread risk. As the piece observes, “€140 billion is less than 1% of EU gross domestic product, but it is a third of Belgium’s.”

Ultimately, if EU members cannot find consensus — whether by backing this plan, issuing joint debt, or offering alternative aid to Ukraine — the credibility of the European project itself may be at stake.

“The pressure to use Russian immobilised assets is only going to grow,” says Nicolas Veron of the Bruegel think tank.

By Sabina Mammadli