Belgium’s Entrenched Resistance and the Euroclear Liability

Last year, Belgium led the charge to dismantle an audacious European plan that would have turned the €210 billion into a zero-interest credit line for Ukraine. Now, Brussels officials vow to block similar maneuvers again. According to Belgian Foreign Minister Maxime Prévot, speaking this week, The reasons behind our opposition have not magically disappeared. Prévot added that Using these assets through a process amounting to confiscation would entail very significant risks. These concerns stem directly from Euroclear holding the vast majority of the funds while currently battling active lawsuits inside Russia.

The Shift to an EU-Owned Custodian Model

To bypass Belgium’s objections, policymakers are evaluating a proposal to transfer the sovereign assets out of Euroclear and into a new custodian entirely owned and controlled by the European Union. According to Sergii Marchenko, Ukraine’s finance minister, this structural shift would isolate Belgium from direct liability. Marchenko stated to Euronews that The proposal which we would like to discuss is a possibility to transfer the custodian of frozen assets from Belgium to the European Union, adding that It will help settle everything and mitigate the risk.

Marchenko argued that this unified model avoids the cumbersome structure of national guarantees and offset mechanisms initially designed by the European Commission to protect Belgium from Moscow’s potential retaliation. It will be the joint responsibility of the European Union. All 27 countries will be signing one accord in this discussion, Marchenko noted. It’s a totally different scenario. While the European Commission acknowledges this option is circulating informally, the executive body remains cautious about relaunching the debate without a guaranteed outcome.

Precedents and Alternative Financial Structures

The custodian concept builds upon a project titled “The Russian Transfer,” spearheaded over recent months by three figures: Reuters commentator-at-large Hugo Dixon, University of Edinburgh Law School honorary professor Lee Buchheit, and PGIM vice chairman and former Biden administration official Daleep Singh. They propose invoking emergency powers under Article 122 of the EU treaties—requiring a qualified majority, which was previously used to indefinitely immobilize the funds—to shift the assets into an EU-owned custodian that lacks corporate domicile in any single member state vulnerable to Russian targeting.

Under this blueprint, Belgium would receive a mandated EU indemnity for the slim risk of incurring damages, while the Russian Central Bank would remain the nominal owner entitled to recover the funds only after paying war reparations to Ukraine. Proponents point to a historical precedent: in March 2003, immediately following the US invasion of Iraq, the White House ordered the transfer of $1.7 billion in Iraqi sovereign assets into a special account at the Federal Reserve Bank of New York. Dixon, Buchheit, and Singh argue that If the EU deploys the €210 billion assets to help Kyiv, Putin will know he cannot win just because Ukraine runs out of cash. He may then conclude that it is best to make peace.

As an alternative, Karel Lannoo, chief executive at the Centre for European Policy Studies, has proposed a Special Purpose Vehicle (SPV) that would isolate the €210 billion principal entirely while leveraging roughly €4 billion per year in extraordinary revenues to back bond issuances. Lannoo suggests utilizing the European Stability Mechanism (ESM)—established in 2012 as a permanent eurozone firewall with a €500 billion lending capacity—to guarantee the bonds. It takes too long for member states to sign off on national guarantees, Lannoo stated regarding the Commission’s earlier failed proposal, emphasizing that It’s better to use what you have to make sure there’s as little friction as possible. Nonetheless, a previous Commission options paper warned that an SPV’s funding costs would run higher than traditional common borrowing.

The Reputational Crisis and ECB Warnings

Despite enthusiasm from proponents, structural hurdles remain formidable. Last year’s initiatives collapsed largely due to fears that foreign investors would interpret the asset repurposing as a sovereign confiscation prohibited by international law, potentially triggering a massive capital flight and a eurozone reputational crisis.

These systemic anxieties heavily influenced the European Central Bank (ECB) during previous negotiations. ECB President Christine Lagarde privately advised EU leaders to tap the Russian assets alongside broader Western allies to prevent isolating the eurozone, and the central bank ultimately declined to extend emergency liquidity for national guarantees. With the ECB, Euroclear, and select member states remaining wary of financial instability that could undermine the euro’s global status, it remains unclear whether a change in custodianship will be enough to alter their stance.