The debate over the €210 billion in Russian central bank assets immobilised in Belgium has resurfaced, and with it the familiar fault lines. Sweden, the Netherlands, Spain and Poland, backed by the Baltic states, are pressing for these funds to be channelled into additional financial support for Ukraine, whose wartime budget is under mounting strain.
But the campaign has again run into a formidable obstacle: Belgium. The country hosts the bulk of the assets at Euroclear, a securities depository in central Brussels, and fears that any move to redirect the money would expose it to unpredictable risks and ruinous litigation. Euroclear is already fighting a lawsuit in Russia.
Last year, Belgium helped scupper a bold plan that would have turned the frozen assets into a zero-interest credit line for Ukraine. It now vows to resist similar efforts. "The reasons behind our opposition have not magically disappeared," Belgian Foreign Minister Maxime Prévot said this week. "Using these assets through a process amounting to confiscation would entail very significant risks."
But what if Belgium were no longer at the centre of the storm? An idea gaining traction across European capitals is to transfer the sovereign assets held at Euroclear to a new custodian owned and controlled by the EU itself. This, proponents argue, would remove the liability and exposure from Euroclear and, by extension, from Belgium.
Ukraine's finance minister, Sergii Marchenko, is enthusiastic. "The proposal which we would like to discuss is a possibility to transfer the custodian of frozen assets from Belgium to the European Union," he told Euronews. "It will help settle everything and mitigate the risk." Marchenko argues that an EU custodian would avoid the complex structure of national guarantees and offset mechanisms that the European Commission had designed to protect Belgium against Moscow's scorched-earth tactics. "It will be the joint responsibility of the European Union. All 27 countries will be signing one accord in this discussion," he said. "It's a totally different scenario."
The Commission is aware that the custodian idea is being floated informally, but it remains reluctant to reopen the debate on financing for Ukraine without a guarantee of success. The executive insists it has never given up on the sovereign assets.
A custodian for all
The concept is not entirely new. For several months, three prominent figures—Hugo Dixon, a commentator-at-large at Reuters; Lee Buchheit, an honorary professor at the University of Edinburgh Law School; and Daleep Singh, vice chairman at PGIM who served in the Biden administration—have led a project called The Russian Transfer that advocates exactly this switch.
They recommend using the emergency powers under Article 122 of the EU treaties to move the Russian assets held by Euroclear and private banks into an EU-owned custodian, citing reasons of public security and financial stability. Article 122, which requires a qualified majority, was previously used to immobilise the assets indefinitely. The custodian, they argue, would not be a corporate entity and therefore would not need to be domiciled in an individual member state that Moscow could target. Belgium would receive an indemnity for the "slim risk" of incurring damages from moving the assets, which the EU regulation would mandate.
The Russian Central Bank would remain the nominal owner of the funds and would be entitled to recover them after paying war reparations to Ukraine. Dixon, Buchheit and Singh point to a historical precedent: in March 2003, shortly after the US invaded Iraq, the White House ordered the transfer of $1.7 billion in Iraqi sovereign assets to a special account at the Federal Reserve Bank of New York.
"If the EU deploys the €210 billion in 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," they say.
Karel Lannoo, chief executive at the Centre for European Policy Studies, has proposed an alternative: a Special Purpose Vehicle (SPV) that would hold the entire bulk of the Russian assets but use only their extraordinary revenues—about €4 billion per year—to back the issuance of bonds. This would help the EU mobilise larger upfront amounts to assist Ukraine, while the principal (€210 billion) would remain untouched at all times.
Under Lannoo's template, the European Stability Mechanism (ESM), created in 2012 as a permanent firewall for the eurozone, would provide the necessary guarantees for the bonds. The ESM has a maximum lending capacity of €500 billion. "It takes too long for member states to sign off on national guarantees," Lannoo said, referring to the Commission's failed proposal. "It's better to use what you have to make sure there's as little friction as possible." He added: "We need to have a structure in place and the solidarity around it."
Interestingly, the SPV was mentioned by the Commission itself in an options paper sent to member states last year. The document, however, warned that the funding costs of an SPV would be "higher" than traditional common borrowing.
Reputational crisis
Proponents of the custodian idea are convinced that changing custodianship would mitigate Belgium's entrenched concerns, break the political deadlock, and bestow on the EU massive financial firepower to support Ukraine. Belgian officials have taken note of the informal pitch and admit it could remove some of their long-standing objections, as Euroclear, a systematically important institution, would no longer be at the centre of the dispute.
But the custodian could face challenges beyond its control. One of the reasons last year's bold plan fell apart at the eleventh hour was the fear that foreign investors might flee European financial markets if the assets were seized. An EU custodian might not fully dispel those worries, especially if Moscow retaliates with legal action against the EU itself.
As the debate intensifies, Ukraine's allies are watching closely. The Kyiv government has urged the EU to rethink its approach, and the latest sanctions round shows the bloc's willingness to act. But whether the custodian idea can break the deadlock remains an open question. For now, Belgium's resistance is as firm as ever, and the EU's executive is wary of reopening a divisive debate without a clear path to consensus.
