How Belgium turned frozen Russian assets into "golden goose"

Belgium has emerged as one of the key obstacles to Europe’s efforts to make greater use of frozen Russian state assets to finance Ukraine, even as the country itself continues to benefit financially from those assets, The Moscow Times reports in an analysis.

The contradiction lies at the heart of the European debate. Belgium strongly supports continued financial assistance to Ukraine, while at the same time seeking to protect the substantial revenues it derives from Russian funds held at Euroclear, the Brussels-based financial institution that serves as the main custodian of the frozen assets. Belgian authorities have repeatedly demanded guarantees against any legal or financial consequences arising from the use of those assets, effectively insisting that Europe share the risks while Belgium retains the benefits.

The issue concerns roughly 185 billion euros in Russian assets held at Euroclear. Western sanctions have prevented Russia from accessing the funds, creating enormous cash balances at the institution. While the underlying deposits remain claims belonging to Russia, the cash generated by the sanctions regime has been reinvested by Euroclear, producing billions of euros in interest income.

Euroclear earned roughly 5.2 billion euros in interest income in 2022 and 2023 alone. Belgium taxed those earnings at its 25% corporate tax rate, collecting approximately 1.3 billion euros in tax revenue, while Euroclear retained the remainder after costs.

Since February 2024, the European Union has required financial institutions to transfer their post-tax windfall profits from sanctioned Russian assets to the EU, with the proceeds used to support Ukraine. Belgium continues to collect its 25% tax on the earnings, while much of the remaining revenue — in some years amounting to as much as 3 billion euros — is channelled toward Ukraine.

That arrangement has created an unusual situation: Belgium can portray itself as contributing to Ukraine’s war effort while simultaneously collecting substantial tax revenues from the very funds at the centre of the sanctions regime.

Belgian Prime Minister Bart De Wever has himself described the Russian money held at Euroclear as “the goose that lays the golden eggs.” His government has nevertheless resisted any proposal that could put those assets or the revenues they generate at greater risk.

The dilemma became particularly clear when the EU considered a so-called “reparations loan” designed to provide Ukraine with roughly 210 billion euros accumulated in European banks as a result of the sanctions. Under the proposal, the EU would borrow the banks’ cash interest-free and lend it to Ukraine. Russia’s underlying bank balances would remain untouched, meaning that the arrangement would not amount to a direct seizure of Russian funds.

Yet Belgium demanded that the EU fully indemnify it against potential legal claims from Russia. Brussels argued that any risks arising from the plan should be collectively assumed by the EU rather than borne by Belgium alone.

The EU eventually offered Belgium and Euroclear a “full guarantee.” Belgium, however, pushed further, demanding a “full and uncapped guarantee.”

That additional demand proved politically difficult for other European governments to accept. Although the legal distinction between a full guarantee and an uncapped one may appear limited, the latter would potentially expose EU member states to unlimited liabilities. The proposal was therefore shelved.

The result has been convenient for Belgium. The Russian assets remain at Euroclear, continuing to generate substantial income, while Belgium continues to collect tax on those earnings. At the same time, the EU has had to turn to borrowing on capital markets to finance Ukraine.

In 2024, the EU and the non-EU G7 countries had already launched the Extraordinary Revenue Acceleration, or ERA, initiative, bringing forward decades of expected revenues by lending Ukraine approximately 45 billion euros. The EU is using future revenues from Euroclear to repay its share of those loans, a process that could take roughly 40 years at current rates.

The EU has now also agreed to lend Ukraine another 90 billion euros for 2026 and 2027. Unlike the ERA mechanism, this package is financed through borrowing on capital markets and backed by the EU budget, with debt-service costs expected to reach roughly 3 billion euros a year from 2028.

This creates the central paradox of Belgium’s position. European governments are being asked to assume increasing financial obligations to support Ukraine, while Belgium is reluctant to expose itself to even remote legal or financial risks connected with the Russian assets that generate substantial revenue within its jurisdiction.

The issue is further complicated by the question of the underlying Russian sovereign assets themselves. One possible approach would be to transfer the assets to Ukraine against future Russian reparations. Many international-law experts argue that such a transfer could be justified as a countermeasure to Russia’s grave violation of international law and its resulting obligation to provide reparations. The Council of Europe has supported this interpretation.

Western governments, however, remain concerned that outright seizure could undermine confidence in sovereign assets held in Western financial centres and encourage other states to diversify away from Western currencies and government bonds.

Russia, for its part, has sought to prevent the frozen assets and the income generated by them from being used to finance Ukraine. Moscow has denounced proposals to use the funds as theft and threatened legal action.

Yet the Moscow Times analysis argues that the distinction between Russia’s underlying assets and the cash balances created by sanctions is crucial. The cash held by Euroclear belongs to the financial institution, while Russia retains a claim to an equivalent amount in its accounts. Lending out the banks’ cash would therefore not itself reduce Russia’s balance.

Nevertheless, Belgium has made clear that it is unwilling to jeopardize what De Wever has called its “golden goose.” The country benefits from the tax revenue generated by the frozen assets while demanding that other EU members assume the potential consequences of putting those assets to greater use.

That leaves Brussels facing a choice that increasingly exposes the double standard at the centre of the debate. Europe can pursue the transfer of Russian sovereign assets against future reparations, revive the proposed reparations loan and collectively assume its risks, or borrow still more money on financial markets and ultimately leave European taxpayers to foot the bill.

For Belgium, however, the incentive is clear: keeping the Russian assets at Euroclear allows the country to continue collecting the proceeds while avoiding the risks associated with deploying the underlying funds more aggressively in support of Ukraine.

The result is a European policy in which the financial burden of supporting Ukraine is increasingly shared across the bloc, while the country hosting the largest pool of frozen Russian assets appears determined to keep the revenues — and minimize the risks — for itself.

By Tamilla Hasanova