EU Commission Doubles Down On Russian Asset Confiscation Despite Belgian Warnings

By Thomas Moller-Nielsen

(EurActiv) — The European Commission reiterated its refusal to rule out confiscating hundreds of billions of euros worth of frozen Russian assets on Monday, despite Belgium’s warnings that such a move could be illegal and jeopardise the financial stability of the eurozone.

European Commissioner for Economy, Valdis Dombrovskis, said that while “all economic and legal risks” associated with the seizure of Russian sovereign assets held in the EU should be “duly considered,” the Kremlin must nevertheless be made to “pay” for the harm inflicted on Ukraine during its nearly three-year-long war.

Approximately €210 billion in Russian assets have been frozen in the EU since Moscow launched its full-scale invasion in February 2022. Around €180 billion are currently held in Euroclear, a Brussels-based clearinghouse.

Dombrovskis’ remarks came just minutes after Belgium’s Finance Minister, Vincent Van Peteghem, said that confiscating the assets poses serious “legal” and “economic risks” to the eurozone.

The Flemish centrist also warned that confiscation could jeopardise member states’ ability to finance a complex €48 billion G7 loan to Kyiv, which is backed by profits generated by the assets.

“The confiscation is a one-off measure, which is nothing compared to the continuous stream of resources that we obtain [from] the windfall profits,” Van Peteghem said.

Dombrovskis, however, said that working out how the G7 loan would be refinanced if the assets were seized is an “important, additional factor to consider” but ultimately not a decisive one.

One EU diplomat said that Belgium is especially worried about the potential financial and reputational harm to Euroclear if the assets are unilaterally seized.

Belgium “wants legal certainty and assurances to avoid there being a risk either that third countries do not trust Euroclear with their money anymore, or that Russia sues the hell out of Euroclear,” they said.

Meanwhile, the EU’s new top diplomat, Kaja Kallas, said that Ukraine has a “legitimate claim” to Russia’s sovereign assets.

“I will not use the word confiscation because it is really using the assets in a legal way,” she said during her parliamentary confirmation hearing in November.

The Estonian’s remarks were subsequently echoed by Dombrovskis, who told Bloomberg in December that Brussels should “explore and work on all options” regarding the frozen assets.

Many professional economists and other EU policymakers, however, have repeatedly warned about the risks associated with confiscation.

European Central Bank President Christine Lagarde said last year that confiscating the assets risks “breaking the international order… that you would want Russia to respect”.

The head of Euroclear, Valerie Urbain, Euroclear CEO, similarly told Bloomberg last month that “if there is a confiscation of assets, everything is up in the air”.

Several other member states, including Germany, the Netherlands and Luxembourg, are also concerned about the legal and financial risks associated with confiscation, according to EU diplomats.