EU – Analysis of legal, financial and political risks linked to the use of immobilized Russian assets

The question of the use of Russian sovereign assets immobilized at Euroclear today places the European Union before a particularly sensitive legal dividing line: remaining within the scope of the protective freeze – a reversible measure, compatible with the logic of sanctions – or crossing the threshold of an irrevocable allocation of funds for the benefit of Ukraine. 

This move from freezing to provision constitutes a major paradigm shift, which clashes with the fundamental principles of public international law, directly affects the structure of sovereign immunities and questions, more broadly, the stability of the international financial architecture.

In this case, Belgium, the head office of Euroclear and the beneficiary of an exceptional tax yield linked to the blocking of these assets, occupies a unique position. His apparent prudence reflects less a political hesitation than an objective necessity: reconciling European loyalty, concrete support for Ukraine and protection of the legal, financial and systemic security of the Kingdom.

I. The general framework: from the management of interests to the debate on capital

Nearly EUR 300 billion of Russian assets have been immobilized in the G7 and the EU, including EUR 176 to 200 billion with Euroclear. The European Union has already taken a significant step by transferring the “windfall profits” from these assets to Ukraine, under the decision of May 21, 2024.

The Commission and the G7 are now considering a loan of EUR 140 to 165 billion guaranteed by future income from these assets. Several States even want partial or total confiscation of capital.

Therefore, it is this shift – from the limited use of interest to a logic of guarantee then capital-backed repair – which crystallizes the most serious legal risks. It is in fact a question of moving from a precautionary measure to a measure constituting a real transfer of assets, touching on the heart of State immunity from execution.

II. The Belgian position: legal prudence and budgetary reality

Belgium plays a central role in this issue. Euroclear is raking in extraordinary revenues (4.4 billion EUR in 2023; 6.9 billion EUR in 2024), heavily taxed in Belgium (625 million EUR in 2023; 1.7 billion EUR expected in 2024). The disappearance of this tax revenue would substantially upset the budgetary balance.

Furthermore, the Belgian government highlights the systemic risks that a unilateral decision would pose for Euroclear and the Belgian financial center. National authorities are therefore calling for risk sharing between Member States, a clear legal basis and increased transparency on assets kept outside Belgium.

The financial dimension is closely intertwined here with legal reasoning: theoretical risks find their concrete translation in the very vulnerability of the Belgian infrastructure.

III. The main legal risks identified

1. In public international law: a direct danger for the sovereignty of States

Public international law is based on a cardinal principle: immunity from execution of the property of the foreign State, and more specifically of the assets of its central bank. This immunity is not a political privilege: it constitutes a mechanism for protecting state sovereignty, guaranteeing that no state can dispose of the property of another outside a strict and exceptional framework.

a) Freezing: measure accepted because it is reversible

The freezing of assets is tolerated as a precautionary measure, because its very essence is reversibility. The targeted state retains ownership and can recover its assets if the measure is lifted.

b) Confiscation: a direct attack on sovereignty

Confiscation or irrevocable allocation of capital constitutes expropriationde facto. It breaks the carefully maintained boundary between economic sanctions and direct patrimonial damage. However, as soon as a State or an international organization arrogates to itself a power of disposal over the sovereign property of another State, it is the very principle of sovereign equality which would be undermined.

Accepting such a measure would amount to establishing a structural exception for the benefit of politically or militarily powerful States, creating a precedent likely,mutatis mutandis, to be invoked tomorrow against any third State. This dynamic would be likely to lastingly erode the protection of sovereign property in the international order.

c) Countermeasures: fragile ground

If the theory of countermeasures is sometimes mentioned to justify an allocation of Russian assets, it should be remembered that:

• countermeasures must betemporarily reversible,
• proportionate,
• and strictly intended to obtain a return to legality.

However, a confiscation or a definitive transfer does not meet any of these criteria. Such an argument would be based on a distortion of the legal regime of countermeasures, dangerous for the overall balance of international law.

d) Litigation risks

Russia could refer the matter to the ICJ, initiate arbitrations or increase domestic appeals. Above all, it could invoke an attack on its sovereign immunity, which would place the Union in a legally fragile position, both vis-à-vis Russia and vis-à-vis the entire international community.

2. In Union law and fundamental rights

The legal basis for confiscation remains uncertain. The right to property protected by the Charter requires that any deprivation be legally regulated, proportionate and accompanied by compensation. None of these elements come together.

Legal security and the protection of legitimate expectations are also undermined: the stability of the euro regime as an international currency relies precisely on the predictability and political neutrality of the system.

3. Risks of private litigation

Euroclear or the Belgian State could be sued contractually or on the grounds of liability. Other states could redeploy their reserves towards currencies perceived as less exposed to political decisions.

IV. Financial and systemic risks

Euroclear could be required, in an unfavorable scenario, to return amounts already transferred. The financial consequences for Belgium would be major, involving either recapitalization, massive public support, or a systemic shock wave.

The ECB has underlined its concern: intrusive use of sovereign assets could undermine confidence in the euro. This could cause massive reallocations towards the dollar, the Swiss franc or gold.

Russian retaliations – including hybrid ones – accentuate the overall risk.

V. Overall analysis of the Belgian position

On a legal level, the reservations expressed by Belgium are serious: the transition from freezing to confiscation constitutes a normative leap with serious consequences for the protection of sovereign immunities.

Financially, the revenues generated constitute an important resource, while Euroclear remains critical infrastructure.

Politically, Belgium remains pro-Ukrainian, but refuses to shoulder alone the risks of a decision initiated at the European and international level.

Accordingly, The European Union is exploring an ambitious but intrinsically fragile path: allocating Russian assets to Ukrainian reconstruction. In the absence of a certain basis in international law, any initiative going beyond freezing threatens to undermine sovereign immunities, at the risk of cracking the very edifice of state sovereignty and creating a dangerous precedent for the entire international system.

Belgium, due to its central role via Euroclear, cannot ignore the systemic and patrimonial implications of such an orientation. His caution comes not from a political posture, but from an elementary requirement of proportionality: supporting Ukraine, yes, but without compromising the international legal order, national financial stability and the integrity of European infrastructure.

Any development must,ultimately, be consideredcum grano dirty, based on a solid legal foundation, clear risk sharing and prudent management of the global balance.