EU pushes ahead on Russian assets use. Dombrovskis: “Euroclear will be able to compensate for seizures”

Brussels – The impression is that, however steep, the path taken by the European Union in financing Ukraine is a one-way street. The use of frozen Russian assets is the first choice of almost everyone, and Belgium—home to Euroclear, the depository company of Russian Central Bank securities worth over 180 billion—has its back against the wall. The confirmation, a week before the decisive summit of the heads of state and government on 18–19 December, came today at the meeting of the economy ministers of the 27. There is no place for the only alternative, shared debt: at this point, only the reconstruction loan for Ukraine is being pushed forward. 

Little does it matter if Belgium threatens legal action should the EU force the agreement and proceed by qualified majority, if Hungary promises battle over the decision—formalised today—to renew indefinitely the sanctions allowing the freezing of Moscow’s assets, if Russia initiates retaliation by initiating proceedings against Euroclear. “It is no secret that, as the Danish presidency, we believe that the reparation loan proposal is by far the best option. Not least because it doesn’t put a strain on countries’ public finances, nor on public debt levels,” said Stephanie Lose, Denmark’s finance minister, upon her arrival in Brussels to lead the work of the EU Ecofin Council. “So it is a solution that will really work,” she insisted.

 Diplomatic work goes on, constantly, between official and informal meetings. Last night, ministers met for an informal dinner on the subject. “There are still some concerns that need to be addressed,” but “we will continue to work to clarify all elements and hopefully pave the way for a decision at the European Council next week,” is the gist of the meeting summarised by Lose. This morning, the official work of the ministers was inaugurated by a gathering—just outside the EU Council building—of some fifty Ukrainian citizens chanting “Belgium, unblock the loan for Ukraine!”

Opposing it, along with Belgian Prime Minister Bart de Wever, is the usual suspect Viktor Orbán. Today, “the people of Brussels are crossing the Rubicon,” the Hungarian prime minister wrote in a post on X. According to Orbán, circumventing the unanimity requirement for the renewal of sanctions against Moscow is clearly illegal. The Hungarian prime minister again promises that Budapest “will do everything in its power to restore a legal order.” 

For the Danish EU Presidency, the hope is that this decision “prepares the ground” for an agreement on the repair loan. At a press conference, the EU Commissioner for the Economy, Valdis Dombrovskis, confirmed: “Obviously, now the work on the repair loan rests on a firmer foundation.” 

Yet, while the ministers’ meeting was taking place, it was the Russian Central Bank itself that tried to shake some certainties, and fuel Belgium’s fears, by announcing that it had filed a lawsuit against Euroclear (which is already using the interest generated by Russian assets to back a separate €45 billion loan for Ukraine) with the Moscow Arbitration Court. The proceedings were brought “in connection with the illegal actions of the depositary Euroclear, which are causing losses to the Bank of Russia, as well as in connection with the mechanisms officially examined by the European Commission for the direct or indirect use of Russian assets without our consent,” reads a note released by Tass. The Russian Central Bank has warned that it will fight at “all available competent authorities, including national courts, judicial bodies of foreign states and international organisations, arbitration courts and other international judicial bodies.” 

Dombrovskis commented that “Russia will continue to initiate speculative legal proceedings, to prevent the EU from enforcing international law and pursuing the legal obligation for Russia to compensate Ukraine for damages.” He stressed that “central depositories such as Euroclear can compensate for seizures in Russia using assets tied up in Europe and are fully legally protected.” 

In short, the Commission is moving straight ahead and can count on the “broad support” of the Member States. To Belgium and the financial institutions involved, it extends its hand: “We are establishing solid guarantees, but we are open to further work,” insisted Dombrovskis—or one more week, when the leaders will be called upon to close the issue.