BRUSSELS – The United Kingdom is advocating for the transfer of nearly €200 billion in frozen Russian assets currently held in Belgium to a distinct investment fund, as revealed by officials. Proponents argue that this initiative could pave the way for the seizure of sovereign assets, potentially channeling them to Ukraine. This strategy has garnered British support but faces opposition from significant EU nations, notably Germany and Italy.
Negotiations amid geopolitical tensions
This proposition emerges as European nations and the United States engage in discussions aimed at establishing a 30-day ceasefire with President Vladimir Putin, with hopes of initiating formal peace talks. Many believe that a robust mechanism for asset seizure could be instrumental in enforcing any agreements reached during these negotiations. France has previously indicated that threatening to transfer these funds to Kyiv might discourage Moscow from breaching a ceasefire.
Despite British government bonds being part of the frozen Russian assets, the U.K. has limited influence over their management, as these assets are officially held under Euroclear—a Belgium-based depository that operates under EU regulations. Although the precise amount of British assets within Euroclear remains unclear, the U.K. government has indicated it possesses approximately £25 billion in frozen private and sovereign Russian funds.
Greater control for the UK
Transferring the Russian assets into a “special purpose vehicle” that acknowledges U.K. interests would enhance London’s authority and could strengthen British Prime Minister Keir Starmer’s position as a mediator between Europe and the U.S. An EU diplomat noted,
“The U.K. could be involved, but on our own terms. They can’t go against what is decided in Europe.”
A spokesperson from the U.K.’s Foreign, Commonwealth and Development Office stated, “We are working urgently with partners to explore all legal avenues to ensure Russia pays for the damage it has caused Ukraine.” Pro-Ukraine European nations are eager to act swiftly, given concerns that Hungary, which has shown a tendency to side with Russia, may obstruct the renewal of sanctions by the end of July. The bloc’s sanctions must be unanimously renewed every six months, and the Hungarian government has signaled its intent to use its veto to potentially return the funds to Moscow.
While moving the funds from Euroclear to a separate entity could serve as a protective measure against this risk, the legal soundness of such a mechanism remains uncertain. Belgium, as the domicile of Euroclear, finds itself particularly vulnerable to any legal implications stemming from potential asset confiscation. Belgian officials have expressed the need for a collaborative approach to share any associated risks. Belgian Foreign Minister Maxime Prévot stated,
“It will not be possible for Belgium to act alone [in the event of a seizure]. We absolutely need to pool the risks.”
Prime Minister Bart de Wever conveyed a similar sentiment during a recent visit to Kyiv, indicating to senior aides of Ukrainian President Volodymyr Zelenskyy the importance of a unified approach. Euroclear is seeking clarity from the EU regarding the ramifications if sanctions are not renewed, as any prolonged legal uncertainty could harm its reputation and expose it to claims for compensation from holders of confiscated assets.
However, some nations advise caution regarding the outright seizure of assets. Lithuanian Finance Minister Rimantas Šadžius expressed, “There is always a chance to move as a final option to confiscation, but I think at the moment it would not be prudent.”
Another motivating factor to expedite the proposed structure is that once established, the funds could be allocated to higher-risk investments that promise significantly greater returns. Euroclear is required to invest these assets, many of which have matured into liquid cash, with the Belgian central bank, yielding the lowest risk-free return available. In 2024, profits generated from such investments were estimated at €4 billion, earmarked to support a G7-wide €45 billion loan to Ukraine.
Nevertheless, there are fears that this loan may not be sufficient to sustain Ukraine’s war-torn economy in the long term. The EU plans to disburse its full €18 billion share of the loan by the end of the year, raising questions about the future financing of Ukraine. Advocates for the new investment vehicle argue that as peace negotiations between Russia and Ukraine progress slowly, every moment that the funds remain unutilized signifies a lost opportunity for both Ukraine and its supporters. An official familiar with the discussions remarked,
“[The real question is] can we generate more interest through the special purpose vehicle.”