Kyiv asks Belgium to deposit 200 billion euros of Russia's assets frozen in Brussels into fund for Ukraine

Brussels-based financial body Euroclear, “the banks’ bank”, plays a crucial role in the financial world. Euroclear's clients include major banks, investment funds and also central banks from all over the world. Among other things, Euroclear holds bonds and shares that are traded. Its total value is €38,000 billion.

A few days after the Russian full scale invasion of Ukraine, the European Union announced far-reaching sanctions against the Russian Central Bank. All assets in the European Union could no longer be traded and were ‘frozen’. An estimated €240 billion euros were frozen. Most of it by Euroclear.

When bonds owned by the Russian Central Bank reach their maturity, Euroclear is not allowed to release the money. And so by the end of 2024, there were 183 billion euros in frozen assets on Euroclear's balance sheet.

Funds may be released if Hungary agrees

European sanctions against Russia must be extended every 6 months. All 27 EU member states must approve the extension. In January, Hungary initially refused being the only country to oppose extending the sanction over the frozen assets. Hungary eventually gave its blessing, but Ukraine fears that Hungary will no longer approve the extension in July.

‘We are very worried that some countries will try to block the extension of sanctions,’ Iryna Mudra, deputy minister of justice in Ukrainian President Zelensky's cabinet, said in an interview with VRT NEWS. ‘That is why we are trying to convince our European partners that it is high time to put these assets into a separate fund.’

That fund would not only take over Russian money from Euroclear, but also all legal liability for it. It would also remove the threat of a Hungarian veto against an extension.

Mr De Wever called possible seizure an "act of war"

The Ukrainian proposal is a response to some strong statements made by Belgian prime minister Bart De Wever on 20 March, at a press conference after the European summit of heads of state and government. In the run-up to that summit, the European Parliament had approved a resolution calling for the seizure of Russian assets. Government leaders from Central and Eastern Europe are also in favour.

‘It is not as simple as it seems,’ Mr De Wever told the international press. "Seizing assets from a central bank is an act of war. It may seem sympathetic and fair to give Ukraine 200 billion euros. But we do not live in a fantasy world, but in the real world. Something like this will have consequences for the financial system. I think the Russians will be angry if we do this. They have means to react, and will use them."

Today, prime minister De Wever and defence minister Francken will meet Ukrainian President Volodymyr Zelensky in Kyiv. According to Ms Mudra, frozen Russian assets will be a topic of discussion.

Ukraine urges riskier investment

Euroclear now invests the assets prudently, and that earned the company an extra EUR 6.9 billion in profits in 2024. On that, it paid €1.7 billion in corporation tax to the Belgian state. The remaining profits Euroclear must hand to the European Union, which passes them on to Ukraine.

According to Ms Mudra, a new fund could invest the money at a higher risk, yielding as much as €15 billion to €20 billion for Ukraine. She thinks it is positive that Belgium is using the tax proceeds from Russian assets to support Ukraine, through the purchase of weapons, for example. ‘But we would appreciate it even more if Belgium gave a larger share of the tax proceeds directly to us’ she said.