Belgium Blocks EU Plan to Use Frozen Russian Assets For Ukraine Aid

In a significant setback for Europe’s financial strategy on the Ukraine war, a bold new scheme by the European Commission (EC) to turn frozen Russian state assets into a multi-billion-euro lifeline for Kyiv has run into strong resistance from Belgium, which holds the vast majority of those funds.

Belgium’s reluctance has brought the proposal — a loan backed by Russian assets rather than direct confiscation — to a grinding halt, raising fresh questions about the EU’s legal authority and political will to tap the frozen money.

What’s the matter? The proposal and the stumbling block

In essence, the European Commission, backed by several member states, proposed structuring a €140 billion loan to Ukraine, using the frozen assets of the Bank of Russia and other Russian state-linked holdings as financial backing. The idea is that Ukraine would receive this loan, repayable only if Russia compensates Ukraine for the war-related damage — thereby turning the frozen assets into a form of reparations collateral.

However, Belgium has balked at this approach. The assets are largely held via the Belgian-based clearing house Euroclear Bank. Belgium’s government and the institution itself have flagged legal risks, especially the possibility of Russia suing and imposing liabilities, as well as financial risk for Belgian taxpayers if something goes wrong.

At the summit of EU leaders on 23 October 2025 the member states asked the Commission to present other options but failed to agree on the asset-backed loan.

How much are the frozen Russian assets—especially in Belgium?

According to multiple estimates, the total frozen Russian state assets run to at least US $300 billion (≈ €275 billion) globally.

Specifically for Belgium/Euroclear:

• Euroclear manages around €200 billion in frozen Russian assets.

• Another article suggests Belgium holds two-thirds of Russian state assets worldwide and 86 % of such funds in the EU and gives a figure of about €183 billion in Belgium.

While precise breakdowns are opaque, it is clear Belgium holds the lion’s share of the EU’s frozen Russian state assets.

Why Belgium is resisting—and what happens next

Belgium’s opposition is driven by several factors:

• Legal uncertainty: Frozen sovereign assets of a foreign central bank are typically protected by immunities and long-standing international law norms. Belgium fears that unlocking or using these assets in a way that resembles confiscation would expose Euroclear (and indirectly Belgium) to lawsuits from Russia.

• Financial liability: Belgium fears bearing disproportionate risk — since the assets are held largely in Belgium, any retaliation or legal judgment would hit Belgium hardest. As quoted: “I am not able, and I do not want, to fork out €140 billion” if something goes wrong.

• Precedent and systemic risk: Belgian officials argue that if sovereign assets deposited in Belgium are seized or redirected, confidence in the Belgian-based Euroclear system may collapse, leading to capital flight and damage to Belgium’s status as a financial hub.

What happens next? 

The European Commission has been asked to present alternative mechanisms by the December 2025 summit. Among them are: using only the interest (already being done) rather than the principal of the frozen assets; a broad multilateral guarantee structure so risk is shared; and possibly a more gradual “collateral” model rather than outright asset transfer.

Unless Belgium (and possibly other sceptical member states) is assured of full legal cover and burden-sharing, a full deal remains elusive.

Implications for Ukraine, the EU and Russia

For Ukraine: The failure to unlock a large loan backed by frozen assets means a crucial financing route remains blocked. Ukraine faces looming budget and defence funding needs for 2026-27 which some estimates put at around US $153 billion.

For the EU: The episode exposes a fault-line in European financial solidarity and collective risk-taking. If one country holding the bulk of the asset says “no”, a unified mechanism stalls. It raises questions about the EU’s ability to convert frozen assets into war-time funding, and about the legal robustness of such mechanisms.

For Russia: The Kremlin has warned legal consequences for Belgium if asset use is perceived as confiscation. Russia’s ability to retaliate — for example by freezing Western assets held in Russia — remains a latent threat, giving added weight to Belgium’s caution.