The European Union faces one of its most dangerous political and legal choices of the past decade: how to utilize more than €200 billion in frozen Russian assets, located mainly in Belgium's Euroclear, without blowing up the very legal framework supporting the European economy. The debate has returned with intensity. A group of 122 MEPs proposes removing Russian assets from Euroclear's management and transferring them to a new pan-European mechanism linked to the European Commission. The core idea is clear: share legal and financial risks among member states and subsequently deploy those resources to support Ukraine. Yet behind the rhetoric of "European solidarity" lies a far more uncomfortable truth. Europe is attempting to find a way to do collectively what no single sovereign state wants to undertake alone.
Belgium does not want to be left holding the bill
The vast majority of Russian sovereign reserves reside at Euroclear, headquartered in Brussels. This means Belgium stands on the front line of every legal and economic fallout. And this is precisely where European hypocrisy begins. While political leaderships casually speak of "utilizing Russian assets," Belgium demands something very concrete: full risk sharing. The reasoning is straightforward. If sanctions are lifted in the future and Euroclear is legally obligated to return funds to the Central Bank of Russia, it could face massive compensation claims. For this reason, Belgian authorities insist they will not bear sole responsibility for a decision enacted politically by the entire European Union. This stance is entirely understandable. The question, however, is different: if the EU believes it holds such a solid legal footing to exploit Russian capital, why must it invent new mechanisms to distribute potential financial losses?
When legal certainty is not so certain
Proponents of the new proposal avoid speaking openly of outright confiscation. Instead, they propose a more complex formula: the Central Bank of Russia would technically remain the owner of the capital, but would be barred from recovering it until war reparations are paid to Ukraine. The wording is politically clever. Legally, however, it remains extremely contentious. Freezing an asset is one thing, but converting it into collateral for future compensation is entirely another. Europe appears to be attempting to create an intermediate status: neither complete confiscation nor actual property rights protection. And this is precisely the kind of legal grey area that could later boomerang back.
The "let's all pay together" logic
The new proposal from the 122 MEPs does not eliminate the hazard. It simply socializes it. Instead of leaving Belgium exposed, the plan distributes liability across the whole European Union. This is the crux of the matter. Europe has not discovered a magical legal tool; it has devised a political risk dispersion mechanism. And that is a vast distinction. Russian Foreign Minister Sergey Lavrov described it in his own blunt terms, speaking of an effort to institute a form of "joint liability." Moscow, naturally, characterizes any use of principal capital as illegal and labels it outright theft. Europe rejects this framing. However, the underlying problem is that even within the EU, complete legal certainty is lacking. If it existed, the decision would have been finalized long ago.
The 2025 failure and the €90 billion loan
This is not the first time the European Union has stumbled over the same hurdle. In December 2025, disagreements surrounding legal and financial risks blocked a more ambitious proposal for a loan to Ukraine secured against Russian assets. Consequently, the EU selected the more conventional path: borrowing directly from capital markets. Thus, an agreement was reached to raise €90 billion to finance Ukraine over the 2026–2027 period. Here lies the heart of the European predicament. As long as Brussels cannot utilize Russian principal without triggering severe legal repercussions, it resorts to sovereign borrowing. In short, it transfers the burden directly onto European budgets. And ultimately, onto European taxpayers.
From profits to principal capital
To date, the EU has proceeded with greater caution. It has not touched the underlying principal of frozen Russian assets on a large scale. Instead, it utilizes revenues generated from their reinvestment. According to European Commission data, from 2022 through early October, the EU and member states have provided Ukraine with approximately €227.4 billion in total assistance. Of that sum, around €3.8 billion originated from revenues tied to frozen Russian assets. This framework is demonstrably safer from a legal standpoint. Yet it falls short for those seeking vastly larger funding streams. Consequently, pressure is shifting directly toward the principal capital itself.
Europe risks something far greater than €200 billion
The issue does not merely concern Russia. It directly impacts the credibility of the European Union as an economic and financial domain. For decades, Europe presented itself as a jurisdiction where property rights, contracts, and the rule of law were rigorously protected. This reputation constitutes immense economic capital. Foreign central banks, sovereign wealth funds, and private investors place assets in Europe believing that rules do not shift according to political expediency. If the European Union sets a precedent where sovereign reserves can be weaponized into tools of geopolitical pressure, other nations will make their own calculations. China, Saudi Arabia, India, Gulf states, and other major economies will question whether their reserves are truly secure in European institutions. This does not imply an immediate flight of capital. It does mean, however, that Europe risks gradually eroding its most vital asset: financial trust.
A dangerous precedent
The political rationale in Brussels is easy to grasp. Russia is conducting a military operation in Ukraine, and Europe aims to raise the cost of aggression. The problem is that the international system is not built on the premise that "the end justifies the means." It is grounded in rules meant to apply even when politically inconvenient. The European Union has spent years accusing other nations of bypassing legality when it fails to serve political priorities. Now it risks doing precisely the same. Indeed, it is doing so through a series of legal loopholes that appear designed to mitigate short-term political fallout rather than guarantee genuine legal safety.
PACE enters the arena
On September 30, the Parliamentary Assembly of the Council of Europe (PACE) proposed a separate mechanism for deploying Russian state assets. The logic behind the proposal is to harness funds to satisfy rulings by the European Court of Human Rights in favor of Ukrainian citizens. Rulings already handed down correspond to claims exceeding €3.3 billion. The proposal remains advisory for now. It does not automatically trigger a transfer of funds. However, it illustrates the broader trajectory. An increasing number of European institutions are searching for alternative legal avenues to achieve the same outcome.
Moscow's response
Russia has made it clear that it will not accept any utilization of underlying principal capital. Dmitry Peskov has warned that Moscow will initiate legal proceedings against anyone taking or executing such decisions. Sergey Lavrov characterizes the plan as criminal. Vyacheslav Volodin speaks of "open robbery" and states that Russia will demand the return of funds with interest. These statements carry obvious political weight. Yet Europe would be mistaken to dismiss them as mere rhetoric. If it proceeds with tapping principal capital, it must anticipate years of litigation battles, countermeasures, and potentially fresh seizures of European assets in Russia. Already by late September, Russian subsidiaries of European corporate entities were placed under temporary management, with the Kremlin explicitly tying these moves to European policy regarding Russian property.
Who pays in the end?
This is the core question Brussels avoids answering. If the venture succeeds, the European Union gains access to a massive funding resource for Ukraine. If, however, subsequent court decisions rule against it, who covers the bill? European governments. In other words, taxpayers. And this is perhaps the most unsettling aspect of the affair. Europe is debating a decision of immense economic and geopolitical significance, yet the ultimate risk does not fall on those passing resolutions. It weighs on national economies. It burdens public budgets. It weighs on citizens.
Europe needs strategy, not accounting tricks
The European Union continues its support for Ukraine. However, this support cannot rest on a perpetual search for legal loopholes. If Europe views Ukraine as a overarching strategic priority, it must possess the political courage to finance this choice openly. Not by presenting Russian assets as a magical piggy bank that can be opened without consequences. There is no such thing as free money. There are only different methods of shifting the financial burden. And in the case of Russian assets, the ultimate cost may prove far greater than the €200 billion that currently appears so tempting. Europe risks acquiring a short-term funding stream while forfeiting something far more critical: its legal credibility, the trust of international investors, and its standing as a jurisdiction where rules remain unyielding regardless of who stands on the opposing side. And if that transpires, the bill will not be delivered to Moscow alone. It will return straight to Brussels.
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