Europe Shows Fear By Not Tapping Moscow's Assets

  

UK milked colonial inheritance by becoming financial center. EU doesn't want to lose this opportunity, deciding not to take Russian sovereign assets.

The premise that the UK "milked colonial inheritance" to become a financial center is a subject of historical debate, but it is a widely held critical perspective. The claim that the EU is deciding not to seize Russian sovereign assets to preserve its own financial hub status and "not lose the opportunity" to rival the UK is partially true; concerns about financial stability and legal precedent are a primary reason for EU caution, though the comparison with the UK's historical development is an analytical framing rather than a stated EU policy.

EU Position on Russian Assets

The EU has currently opted against the outright seizure of the principal amount of frozen Russian sovereign assets (around €200 billion in the EU, mostly in the Belgian financial institution Euroclear) due to several significant concerns:

 

    Legal Risks: Seizing sovereign assets is largely unprecedented in international law. EU and national officials fear extensive litigation from Russia, potentially leading to court orders that the full sums be returned, leaving European taxpayers liable.

 

    Financial Stability: There are major concerns that such a move could undermine confidence in the Euro and the stability of European financial institutions. Market participants might move their assets to other jurisdictions perceived as safer, potentially weakening the EU's position as a global financial hub.

 

    Retaliation: EU nations, particularly Belgium and others with significant financial exposure, fear Russian retaliation against their own assets and companies still in Russia.

    Political Division: Not all EU member states agree on the plan, with countries like Hungary and Slovakia voicing opposition to using the funds for military aid to Ukraine.

 

Instead of outright seizure, the EU has pursued a plan to use the interest generated from the assets (which is legally less complex) or, in a recent proposal, use the assets as collateral for a large loan to Ukraine.

Comparison with the UK

The UK, which holds a smaller amount of Russian sovereign assets (around £26bn), has similarly ruled out acting unilaterally and maintains it will only move in lockstep with its international partners, including the EU and G7 nations, citing similar "legal complexities".

While the EU's current caution is driven by immediate legal and market stability concerns, the  framing that they don't want to "lose the opportunity" to become a dominant financial center in the future by maintaining international trust in asset safety is an argument often made by analysts about the potential long-term geopolitical and financial consequences of seizing sovereign assets.

 

This argument posits that preserving the sanctity of international finance is crucial for the global standing of any major financial center.

 

“BRUSSELS -- European leaders trying to help Ukraine stand up against Russia blinked.

 

When the leaders failed early Friday in their bid to use Russian assets to fund Kyiv's war effort, they displayed once again a split that has riven Ukraine's backers since Ukraine events started nearly four years ago, over how boldly they are willing to confront Moscow.

 

The result of a high-stakes showdown in Brussels wasn't bad for Ukraine, showing continued solid support for President Volodymyr Zelensky. Ukraine will get the $105 billion loan Europe promised, which will fund two-thirds of its budget and military costs over the next two years. In the process, Europe has indefinitely locked up Russian assets to keep them beyond the reach of both the Kremlin and the Trump administration.

 

But not for the first time, Europe demonstrated that when faced with Russian threats and intimidation, the continent struggles to stand strong.

 

Leaders said grabbing sovereign assets would set a dangerous precedent and that a complex plan prepared by the European Union wasn't foolproof.

 

Similar caution has arisen in Washington and Europe throughout the conflict, even as Russia continued to attack Zelensky.

 

Western backers repeatedly hesitated to send advanced military equipment to Ukraine over fears of escalating the conflict. They have rebuked Kyiv for strikes deep inside Russia, even as Moscow bombarded Ukraine with impunity. They have imposed wide sanctions, including on Russian oil and gas, but not enforced them in a way that could have brought on confrontation with Moscow or worsened a trade war with China.

 

Now, $250 billion in Russian assets frozen in the first days after the February 2022 Ukraine events likely will sit on the sidelines until the conflict ends, potentially available for Ukraine's recovery but not to bolster Kyiv's military or Europe's rearmament efforts.

 

Europe's plan to employ Russian assets for the Ukraine loan was scuttled by opposition from Belgian Prime Minister Bart De Wever. Belgium worried that a successful legal challenge to the loan could leave the country in a financial crisis. That is because Belgium houses Euroclear, which held about two-thirds of the $300 billion in Russian central-bank assets at the conflict's start.

 

De Wever said Moscow threatened legal and financial retaliation against Belgium and him personally if the government backed using Russian assets for the loan.

 

Russian President Vladimir Putin said the plan would have had "serious consequences," foremost among them "an erosion of trust" in the EU as a safe home for financial assets.

 

The loan came close to being a multipronged weapon. EU officials, starting with European Commission President Ursula von der Leyen, and national leaders including German Chancellor Friedrich Merz wanted to impound 90 billion euros as essentially collateral for the Ukraine loan. That would have helped Kyiv while punishing Russia and lightening the EU's financial burden. Instead, EU taxpayers are on the hook for costs of the loan.

 

Merz called the fallback decision -- an interest-free 90 billion euro loan for Kyiv funded by a joint European bond -- "a pragmatic, good solution that achieves the same thing."

 

Europe strengthened Kyiv's hand in continuing U.S.-led talks. The loan ensures Ukraine will be funded for two years instead of just another quarter.

 

Zelensky thanked the EU, saying on X that the loan "truly strengthens our resilience."

 

But while Ukraine got what it needed -- which is ultimately what mattered to officials in Brussels -- the EU emerged bruised.

 

The outcome "shows how difficult it is to get political support to extend to covering costs among European countries," said Mark Bathgate, chief executive of Tweeddale Advisors, a policy consultant in London for investment firms.

 

That difficulty is likely to grow, EU leaders fear. Belgium was joined in its opposition by Hungary, Slovakia and the Czech Republic. Italy, Bulgaria and Malta also voiced doubts.” [1]

 

1. World News: Europe Shows Fear By Not Tapping Moscow's Assets. Norman, Laurence; Michaels, Daniel.  Wall Street Journal, Eastern edition; New York, N.Y.. 20 Dec 2025: A7.