The EU’s great frozen Russian asset holdup

You do not invade Russia in winter. Napoleon learned that from the comfort of the Louvre’s heated salons, long before anyone could swipe the empress’s jewels from beneath the museum’s nose.

Anyone convinced that the great European jackpot of 2025 is the glitter stolen from a display case has lost the plot. That embarrassment will fade; the real holdup unfolds in Brussels, inside council rooms where leaders who spent decades lecturing the world on the sanctity of the rule of law scheme to convert roughly 210 billion euros (US$246 billion) in frozen Russian assets into a pan-European cash machine.

In doing so, the EU trades legal credibility, financial trust and institutional coherence for a shortcut that solves nothing and leaves permanent damage. The leaders—weak at home, lacking a coherent policy on Ukraine, and having promised the war would cost Europeans nothing—now impersonate creative accountants, searching for pretexts to characterize seizure as strategy.

Moral outrage, desperation and righteous indignation, all properly packaged, are rewriting once-sacrosanct treaties. The slide from the “Brussels Effect” to political and financial opportunism marks the elite’s final capitulation: lending to others by leveraging someone else’s money is presented as continental lawful heroism rather than mere scam.

1. The Theology of Convenience

Before February 2022, European officials preached constitutional purity with liturgical conviction. Three years ago, ask any of them about touching assets that belong to others and they would recite the catechism: the sanctity of property, protection of the euro’s credibility and exhaustion of every alternative before crossing such lines. They would have failed a first-year law student proposing this arrangement; now they champion it as visionary statecraft.

The politicians—who pass for leaders only by default—only moved when they felt Donald Trump’s breath on their necks. The Trump-Putin 28-point Ukrainian plan proposed channeling Russian assets into commercial benefit for Washington and Moscow—Washington taking 50% of the profits and the rest invested in a US-Russian joint vehicle.

That crystallized the real motivation: EU representatives acted less from principle than from fear of exclusion, unable to account for passivity before their constituents. Using the reserves became a race to outpace Washington and less about Ukraine or justice than political survival.

Indeed, a senior US official confirmed to Asia Times what alternative media had circulated: after a December 15 meeting between Ukrainian and US negotiators in Berlin, Polish Prime Minister Donald Tusk highlighted a stark gap between Washington and Brussels.

“The Americans are saying ‘Leave these Russian assets alone.’” If the US sees any scheme as jeopardizing a peace deal, what, then, is the objective of Ursula von der Leyen, Friedrich Merz and the rest?

And so here we are. The heirs of the single market now treat rules as discretionary, ignoring them whenever inconvenient and exposing a political class trapped by failure, unable to produce their own peace plan for Ukraine nearly four years into the war.

To be fair, 12 months of US pressure delivered a clear lesson: act first, rationalize later and cover the mess with moral righteousness. EU officials emerged from the Scotland Summit weakened yet converted, executing Trump’s playbook with the zeal of devoted disciples.

Since then, the ‘Ndrangheta mafia-style tactics have piled up. First, after changing the rules because existing ones require unanimity, officials invoked Article 122, an economic emergency clause that allows approval by qualified majority.

Then, in case a major state like Italy abstains, Merz’s team bullies: countries that refuse to back it “would suffer dire financial consequences,” having “a negative impact on credit ratings,” German Europe Minister Gunther Krichbaum warned.

Hungarian Prime Minister Viktor Orban called the operation “an open declaration of war” and “an open violation of the law,” threatening with legal action. Intended or not, the fracture may surprise Brussels: “Budapexit” now looks less and less like intimidation than plausible endpoint, a reverse enlargement in plain motion.

2. Reparations loan and legal quicksand

Brussels plans to convert 210 billion euros in frozen Russian central bank reserves into collateral for zero-interest loans to Ukraine, seizing assets that do not belong to the EU and handing them to a non-member state, backed by guarantees that could bind European taxpayers with liabilities exceeding the entire Greek debt crisis.

Dubbed a “reparations loan,” the scheme formalizes – direct or indirect – confiscation into an allegedly legal credit instrument. Weak as a tool of pressure on Russia and largely symbolic, it masks piracy and leaps over precedent. Scholars such as Luuk van Middelaar have pointedly asked legislators: “Stealing from the enemy, a murderous regime—does that really count as stealing?”

The European Central Bank has refused to backstop the operation, arguing it amounts to prohibited “monetary financing.” Even within EU institutions, the plan rests on shaky foundations. Likewise, converting sovereign reserves into a political weapon undermines trust in EU jurisdictions as safe havens for central banks and sovereign wealth funds, with destabilizing effects on bond markets. Even the International Monetary Fund has urged caution, warning of unpredictable consequences for global monetary system stability.

Ukraine’s ability to repay the funds is uncertain at best, leaving European citizens on the hook once again. Kyiv would reimburse the funds only if Moscow, once the war ends, pays for the damage inflicted, a premise detached from reality, since reparations usually follow defeat. Brussels calls this “solidarity,” a refrain echoed by former corporate lawyer Merz, the plan’s most persistent advocate.

3. Euroclear time bomb

The absurdity peaks with Euroclear, the Belgian institution holding 185 billion euros in frozen Russian reserves and safekeeping securities for central banks and sovereign wealth funds worldwide. All are watching how brazenly the EU establishment manipulates international finance for political ends.

Once Russian assets are used, every government with funds deposited in Europe will ask the same question: could we be next? Beijing, Riyadh, Delhi and Abu Dhabi will see a system in which the line between adversary and depositor is no longer clear. Every account could be at risk when political expediency overrides financial safety.

Valerie Urbain, Euroclear’s CEO, announced the possibility of suing the EU if the structure chosen to use frozen Russian assets amounts to confiscation. “We are a crucial link that must remain infallible for the stability of financial markets.”

Belgium hosts the liability trap. Euroclear’s contracts should bind it to repay the Central Bank of the Russian Federation once sanctions end—an obligation that lands on Belgian jurisdiction alone. If those funds are transferred to Ukraine, Belgium carries the debt when Russia comes collecting, vulnerable to whatever pressure Moscow chooses to apply.

In the meantime, Belgium’s conditions read like an emergency brake: full risk mutualization among member states, liquidity safeguards to shield Euroclear from inevitable lawsuits and burden-sharing that pools the 185 billion euros with the 25 billion euros scattered across France, Germany, Sweden and Cyprus. The mask slips when the Union cannot secure support of the country hosting its own institutions.

4. Self-inflicted wound

Russia’s war is illegal and demands accountability, including reparations. Moscow commits atrocities, violates sovereignty and abuses its UN Security Council seat that nobody treats as meaningful. None of this changes a basic fact: Europe’s economic rupture did not stem from Russian aggression but from Brussels’ own choices.

The unfinished decoupling from Russian energy was self-imposed, executed without preparation and pursued as though markets could bend to moral enthusiasm. It followed decades of “Wandel durch Handel” policy, long hailed as visionary and then condemned as catastrophic overnight. The self-inflicted blow makes Brussels’ current stance absurd: you forced me to hurt myself, so now I seize your assets, hand them to a third party outside my union and call it noble justice.

Ukrainians deserve support. Yet the plan exposes Europe’s lack of a serious reconstruction framework and unwillingness to fund one with its own resources. The plan treats the Eurozone as collateral for vigilante justice while extending EU liabilities: fighting illegality with illegality exposes a leadership convoluted in a never-ending spiral toward catastrophe.

Compare this to earlier citizen responses of accepting millions of refugees, delivering generous aid and allowing representatives to supply ammunition—all more or less aligned with European values without jeopardizing the euro or legal order.

Are there other alternatives? If so, leaders have not found them. Nevertheless, Brussels could have relied on Norway’s AAA credit rating—the highest in the world—to guarantee loans. Norway has profited from the war through elevated gas sales to Europe at inflated prices. Extending a guarantee would have allowed Oslo to contribute without Brussels destroying its own legal foundations. Instead, Brussels chose the path that corrodes trust.

5. Precedent that devours itself

Central banks, finance ministries and scholars issue the same warning: break precedents and trust evaporates. The contrast with early European integration is stark. The euro’s architects understood that credibility rests on discipline, even when inconvenient. The single market was designed to prevent distortions; the euro enforced discipline. Today, the bloc mishandles foreign reserves while asking global investors to trust its system.

Will decades of confidence survive this breach? No, because each violation turns the next into routine. Even Nobel laureate Joseph Stiglitz, advocating for the measure, offers a fragile defense: “Notably, there has been no capital flight from the US or Europe. This is because there are few safe alternatives to the established financial system.

Assuming that governments do become wary of keeping their assets in the US, Europe, or Japan, where else are they going to hold them?” The argument boils down to: let’s dismantle the system because exit options are limited. Henry Kissinger, for all his cynicism, looks almost romantic beside the realism some economists now defend.

Nevertheless, seizing the principal invites lawsuits in tribunals that could drag on indefinitely, with no guaranteed outcome. Worse, it signals to every central bank that euro reserves in European clearinghouses are fair game for political confiscation, gutting confidence in the currency’s reserve status.

If Brussels pushes this through over objections, the political fallout will outweigh any financial relief for Ukraine. Adversaries will not need to fabricate propaganda; they will simply quote EU officials explaining why rules no longer apply when inconvenient, why property rights dissolve under moral pressure and why the same institution that prosecutes members for budget violations now treats foreign reserves as budgetary windfall.

New European reality

The frozen-assets scheme marks the moment Europe’s political class abandoned the pretense that law constrains power, burying the “Brussels Effect.” Officials who once built frameworks to limit discretion now openly celebrate its unlimited exercise. Institutions that once punished creative accounting now practice it themselves.

This is not strength, display of constitutional power, or assertion of sovereignty that governments and sycophants euphorically celebrate in epic tales stripped of common sense; it is exhaustion masquerading as resolve. The Louvre may recover its stolen jewels, but Europe will not recover the credibility sacrificed when expropriation is rebranded as justice.

In the meantime, European leaders are about to learn what Napoleon discovered in Moscow: some holdups exact a far higher price than they yield. The reckoning will come through lawsuits, fleeing depositors, a weaker euro and a financial order corroded by precedent.

By then, the architects and champions of this scheme—von der Leyen, Merz, Macron and Sanchez—will have left office, forcing their successors to justify why Europe’s word no longer holds value and why the rules that once defined the Union unraveled the moment they became inopportune.

Sebastian Contin Trillo-Figueroa is a Hong Kong-based geopolitics strategist with a focus on Europe-Asia relations.