The EU should play its Rus­sian assets card

There are ways to over­come a Bel­gian block and provide vital sup­port to Kyiv

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Don­ald Trump’s latest attempt to bull­doze Kyiv into an unfa­vour­able peace deal with Moscow has exposed, once again, Europe’s inab­il­ity to shape the course of events in Ukraine and assure its own secur­ity. Europeans are pay­ing the price for dec­ades of under-invest­ment in defence and for cling­ing on for too long to Amer­ica’s secur­ity umbrella.

European cap­it­als have helped Ukraine to revise some of the most egre­giously pro-Krem­lin ele­ments of the US peace pro­posal. But Trump’s instincts are always to side with Rus­sia to seal a deal. Ukraine’s Pres­id­ent Volodymyr Zelenskyy is also at a moment of acute polit­ical dif­fi­culty. His power­ful chief of staff Andriy Yer­mak resigned on Fri­day after an anti-cor­rup­tion raid on his home as part of an invest­ig­a­tion into a scan­dal that has implic­ated two former min­is­ters. Zelenskyy has been severely weakened; he must act swiftly to change how he gov­erns. But the epis­ode at least high­lights that Ukraine now has func­tion­ing inde­pend­ent anti-graft bod­ies.

Europe does have one big card: its con­trol of the bulk of Rus­sian cent­ral bank assets frozen since 2022. The EU has pre­var­ic­ated for so long on how or whether to use this card that it risks los­ing it alto­gether. Trump’s latest pro­posal would have grabbed the bulk of the assets for a US-Ukraine invest­ment fund and one with Rus­sia, with profits flow­ing to the US, not Europe. The EU has been para­lysed by its own risk aver­sion and leg­al­istic argu­ments. Recently, it has been held host­age by Bel­gium, where most of the assets are held, which fears being on the hook if Rus­sia is one day able to recoup the money.

The EU’s instinct to uphold inter­na­tional law is well-foun­ded. With not just Rus­sia but now the Trump admin­is­tra­tion tramp­ling on inter­na­tional norms, however, it has to con­sider extraordin­ary steps to sup­port Ukraine and its own secur­ity. It should pro­ceed with plans to make €140bn avail­able to Kyiv as an advance on Rus­sian repar­a­tions and linked to Rus­sia’s blocked assets. This would not amount to seizure of the assets — cre­at­ing a risky pre­ced­ent — as Rus­sia’s sov­er­eign claim to them would be untouched. But this mul­ti­year fund­ing would be a game-changer in ensur­ing inde­pend­ent European mil­it­ary and budget­ary sup­port for Ukraine.

As Ger­man Chan­cel­lor Friedrich Merz argued in the Fin­an­cial Times in Septem­ber, it would be an expres­sion of Ukraine’s and Europe’s “stay­ing power”. This is not an argu­ment for pro­long­ing a war that has been dev­ast­at­ing for Ukraine as well as Rus­sia. It is about bring­ing an endur­ing peace sooner by rais­ing the costs of Putin’s aggres­sion and max­im­al­ist demands.

Bel­gian Prime Min­is­ter Bart De Wever’s claim that the loan scheme would set back the peace pro­cess is con­veni­ent, but he has also raised some legit­im­ate con­cerns. Most of the assets frozen by the EU are held in the Brus­sels-based cent­ral secur­it­ies depos­it­ory Euroclear. If Moscow won the assets back, whether in an unlikely court vic­tory or because EU sanc­tions lapse, Euroclear and by implic­a­tion the Bel­gian gov­ern­ment would be liable.

There are solu­tions, however. EU lead­ers could either agree to indem­nify Bel­gium for risks relat­ing to the assets, or they could take the mat­ter out of Bel­gium’s hands by trans­fer­ring all rel­ev­ant assets, liab­il­it­ies and profits to a sep­ar­ate legal entity out­side of Bel­gium.

The former is res­isted by cash­strapped EU gov­ern­ments, though short of hand­ing Rus­sian assets to Ukraine, their tax­pay­ers remain exposed. The lat­ter would require a reg­u­lat­ory act to segreg­ate the assets and an EU mem­ber state will­ing to host the new entity.

But it is time for the EU to act. At stake is not just Ukraine’s sur­vival but the future of European secur­ity.