### EU Moves to Permanently Freeze Russian Assets for Ukraine Loan Amid Legal and Financial Tensions
European Union governments have agreed to indefinitely freeze approximately €210 billion in Russian central bank assets held within the EU, primarily at the Belgian clearinghouse Euroclear. This decision, made using an emergency treaty clause, removes the previous requirement for unanimous renewal every six months and aims to pave the way for using these funds to support Ukraine. With Ukraine facing an estimated €135.7 billion funding shortfall over the next two years, European leaders are pushing for a plan to leverage the frozen assets for a substantial loan—up to €90 billion—to bolster Ukraine’s military and economy. The EU frames this as a „reparations loan,” arguing it is just for Russia to pay for the destruction it has caused. However, the move has triggered a lawsuit from Russia’s central bank against Euroclear and raised significant concerns from Belgium, which hosts the bulk of the immobilized funds.
The EU is racing to finalize a legally sound mechanism ahead of a critical summit, navigating complex proposals and political divisions. One option involves raising capital market funds backed by the EU budget, but this requires unanimous approval, which is unlikely due to opposition from Hungary and Slovakia. The leading alternative is a direct loan to Ukraine sourced from the frozen Russian assets, now largely held as cash at the European Central Bank. While the European Commission asserts it has addressed Belgium’s concerns by offering guarantees to cover potential losses—including offsetting risks from Russia seizing Euroclear’s own assets there—Belgium remains wary. Prime Minister Bart De Wever has demanded ironclad legal and financial safeguards, fearing that his country, with a GDP of around €565 billion, could be exposed to catastrophic liabilities if the plan backfires or destabilizes the financial system.
Belgium’s apprehensions highlight the broader legal and economic tightrope the EU is walking. Experts warn that forcing Euroclear to concentrate such a massive loan could violate EU banking regulations designed to ensure financial stability. Meanwhile, international pressure mounts as U.S. military aid to Ukraine has dwindled under the Trump administration, increasing Europe’s burden to fill the gap. The EU’s decision to make the asset freeze indefinite underscores its commitment to supporting Ukraine “as long as it takes,” but the path forward hinges on reconciling urgent Ukrainian needs with the legal protections demanded by key member states and the integrity of the global financial system.
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