Belgian Ambassador Luc Jacobs sat in a Kyiv conference room on 17 October at the “Money for Victory” conference organized by the International Centre for Ukrainian Victory (ICUV) and the National Interests Advocacy Network (ANTS), defending his government’s position to a room full of skeptical Ukrainian advocates.
Via video from Washington, D.C., British economist and financial markets analyst Timothy Ash wasn’t buying it.
Europe froze €183 billion ($196 billion) in Russian central bank assets in April 2022—the decisive legal step that cut Moscow off from the money. Since then, Belgium has collected €1.7 billion ($1.8 billion) in taxes on windfall profits from those frozen assets, money it pledged to use for Ukraine aid.
However, the bulk remains locked in Brussels, blocked by Belgium’s insistence that other EU members must first guarantee they’ll share litigation risks. As Ash bluntly explained, the problem is that Belgium is closing a barn door that’s been open for three years.
“There’s zero evidence anyone moved reserves”
“The decisive message was already sent in April 2022 when assets were first immobilized,” Ash said. “Russia will never recover these resources unless it pays reparations.”
He pointed to the $7 trillion global foreign exchange reserves in European and American markets. China didn’t pull its money. Saudi Arabia didn’t either. Major reserve holders “don’t trust each other,” and more importantly, there are no liquid markets capable of absorbing that volume.
Belgium’s fears of retaliation? Economically illogical, Ash argued. If countries like Saudi Arabia sold European or US bonds in protest, global interest rates would rise, growth would fall, and oil prices would collapse—” which will massively hurt the Saudi Arabian budget.”
Ambassador Jacobs held his ground. “We have to stay within the law because that is the big principle that you are fighting for as well,” he said, noting concerns about maintaining trust in the European financial system.
Belgium’s position isn’t opposition, he stressed, but caution.
The decision must be “legally tight, legally sound” to avoid causing Europe more harm than it inflicts on Russia.
Five days later, nothing had changed.
Hundreds of billions in limbo
The standoff centers on Euroclear, a Brussels-based securities depository holding €183 billion ($196 billion) in immobilized Russian central bank assets. Belgium, where Euroclear operates and the government has a 12% stake, demands that other EU members guarantee they will share litigation risks before the assets back loans to Ukraine.
As reported by Euractiv on 22 October, Belgium, along with Luxembourg and the European Central Bank, remains “considerably more cautious” about the EU’s proposed €140 billion ($150 billion) reparation loan mechanism. According to EU diplomats, the Commission’s three-page briefing note to EU ambassadors failed to address Belgium’s demand for “strong and clear text” that “needs to be legally binding” on risk-sharing.
Belgium worries about Russian retaliation.
Russia holds blocked foreign accounts worth roughly a quarter-trillion rubles that could be nationalized in response, potentially creating capital holes for Euroclear. Belgium’s government has stated that breaching international financial rules would expose Belgium and the EU, as investors might reconsider investments in European markets.
But Ash challenged conference participants directly: “If you don’t want to do this, tell us exactly how you propose to fill the hundred billion a year funding requirement of Ukraine.”
Ukraine makes its case
Ukrainian officials argue this isn’t charity but justice. Mykola Yurlov from Ukraine’s Ministry of Foreign Affairs, outlined what Ukrainian officials characterize as a legally sound mechanism: a “reversible transfer” rather than confiscation, where the transferred amount would be subtracted from the over $1 trillion Russia owes Ukraine through a “set off” mechanism under international law.
“International law is very clear about this,” Yurlov said. “You can take the assets of another state if that state is waging a war against the international order.”
He emphasized that highly qualified international law professors have written detailed legal memoranda demonstrating the permissibility of this approach through the counter-measures doctrine.
The November 2022 UN General Assembly resolution, supported by 94 states, affirmed that Russia must bear legal consequences for its aggression, including compensation for all damage. Ukraine has since launched a Register of Damage with more than 60,000 claims registered.
Negotiations concerning a Claims Commission were recently finalized in The Hague, with a convention establishing the Commission set for adoption on 16 December.
But Iryna Mudra, Deputy Head of the Office of the President of Ukraine, described the reparation mechanism as “a bridge between immediate needs and the full transfer of frozen assets to Ukraine”—and then outlined demands that would challenge standard international lending practices.
Ukraine insists on receiving funds with no conditionality on how they will be used, complete autonomy in prioritizing expenditures, and the ability to direct major portions to defense, including personnel costs.
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The cost of delay
According to Ash’s estimates, Ukraine requires $100-150 billion annually to sustain its defense and economy. Nonetheless, the G7’s existing Economic Resilience Activity (ERA) loans program, which Euroclear has already funded with €1.6 billion ($1.7 billion) in its third tranche, provides only $50 billion total using interest income from frozen assets rather than the principal.
The proposed reparation loan would tap into the €140-175 billion ($150-187 billion) in matured Russian assets at Euroclear, providing multiyear funding certainty. Germany’s Chancellor Friedrich Merz backed the plan as an interest-free loan repayable only once Russia compensated Ukraine for war damages, driven partly by fears that Germany would otherwise shoulder Europe’s Ukraine costs alone.
“The bigger risk to Europe is not doing this,”
Ash said, warning that if Ukraine loses due to insufficient funding, European countries like Belgium would face immediate defense spending increases to 5% of GDP—up from current levels of 2.3-2.7%—resulting in higher interest rates, lower growth, and increased social unrest.
Russia has caused more than $1 trillion in damage to Ukraine since 2014, according to European Investment Bank calculations.
A dangerous vulnerability
Andriy Mikheiev, another Ukrainian legal expert at the conference, highlighted a separate structural problem: EU sanctions against Russia require unanimous renewal every six months. If even one member state—and participants noted Hungary’s consistent opposition to Ukraine support—votes against renewal, Russian assets would be “transmitted back to Russia” within a month.
He pointed out that EU guidelines officially recognize an alternative approach where sanctions automatically continue unless evidence shows objectives have been reached, requiring only qualified majority voting to lift them.
“This is officially adopted and this is really surprising why it’s not applied by the Council of the European Union,” Mikheiev said.
The six-month renewal cycle means both the existing ERA loans program (which uses only windfall profits from frozen assets) and any future reparation loan face recurring political risk. “Each half of the year shall be a big surprise, not in a good way surprise, for Ukraine, for the European Union, for the international community,” Mikheiev warned.
Stuck in neutral
European Pravda reported on 21 October that Belgium agreed not to block the EU idea, with EU leaders asking the European Commission to draft a concrete proposal. However, Euractiv noted that the Commission’s briefing note failed to quell Belgium’s concerns.
The country seeks guarantees that other EU members will share legal and financial liability, insisting on legally binding commitments rather than political assurances.
Yurlov concluded his conference remarks by framing the issue as fundamentally political rather than technical: “There is no impediment from the legal or economic standpoint to address this reparation loan. The only question is the political will. What we’re asking about partners is to be at least half as brave as our defenders are sacrificing their lives not only for Ukraine but for the future of Europe and the world.”
The asymmetry remains stark: Europe has already channeled €3.55 billion ($3.8 billion) in windfall profits to the European Fund for Ukraine through the ERA loans program during 2024 alone. Belgium collected €1.7 billion in taxes.
Yet, the underlying principal of €140-175 billion sits frozen, blocked by demands for guarantees against consequences that, according to Ash’s analysis, already occurred when Europe made its choice in April 2022.
