Belgium attempts to dissuade EU from loaning frozen Russian assets to Ukraine
The European Commission’s plan to loan frozen Russian assets to Ukraine is "fundamentally flawed", prime minister Bart De Wever writes in a letter to Commission President Ursula von der Leyen. Brussels-based securities house Euroclear and the National Bank of Belgium also sent separate letters to the EU, cautioning its leaders about the legal and financial risks of the plan.
The European Commission intends to mobilise frozen Russian state assets, most of which are held at Euroclear in Brussels, to raise around 140 billion euros for a loan to Ukraine. While Belgium has repeatedly warned of the legal and financial risks of the plan, the EU is upping the pressure on the country to go along with it.
In a letter reported on first by the Financial Times and seen by Belga, De Wever writes to von der Leyen that, although Belgium's concerns have been acknowledged, they have not been properly addressed.
Violation of international law
De Wever reiterates Belgium’s warnings that using the assets would violate "a fundamental principle of international law" and create instability in global financial markets. Countries with significant reserves in Europe might choose to withdraw them, he said, even if the EU maintains the plan does not amount to unlawful seizure.
According to De Wever, there is a real risk that the EU would ultimately be forced to repay the funds. That would require guarantees from member states. He also argues that countries hosting frozen assets should all contribute to the plan, not only Belgium.
The prime minister also warns of possible Russian retaliation, particularly targeting Euroclear and Belgium. De Wever further notes that frozen assets may play a role in future peace negotiations and that using them now could complicate those talks.
De Wever points to alternative options outlined by the Commission, including a joint EU loan of around 45 billion euros in 2026, which he argues could prove cheaper when factoring in the risks of the current plan.
The issue will return to the agenda of EU leaders at the summit on 18 December. Belgium is "not vetoing", the prime minister said, but can only agree if its concerns are fully addressed. De Wever and von der Leyen last discussed the matter in person on 14 November, with further technical talks ongoing. The Commission president told the European Parliament on Wednesday that a legal text would be presented "soon", potentially this week.
Euroclear and National Bank share concerns
In separate letters to EU leadership this week, Euroclear and National Bank also warn of consequences if the bloc decides to use the frozen assets.
Euroclear CEO Valérie Urbain warns that using the frozen Russian assets held in Brussels would set a precedent that markets outside the EU could interpret as "confiscation". That could deter investors from buying European government bonds and push up borrowing costs.
Belgian National Bank governor Pierre Wunsch issued a similar warning, sharing his concern about "any funding option that could directly or indirectly affect Euroclear Bank's risk profile".
"The potential realisation of all types of risks for Euroclear Bank in all extreme but plausible scenarios should be carefully considered and addressed by the EU institutions and member states," Wunsch wrote.
Prime minister Bart De Wever and European Commission president Ursula von der Leyen. PHOTO © Nicolas TUCAT / AFP
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