Belgium Faces Russia Reserves Risk

Three former Western officials proposed on 8 August that the EU take administrative control of roughly €210bn in frozen Russian central-bank reserves. The idea, first reported in German media, comes from Annegret Kramp-Karrenbauer, Germany's former defence minister, Nathalie Loiseau, France's former minister for European affairs, and Daleep Singh, a former senior US sanctions official (FAZ, RBC Ukraine). It is still a campaign from outside government, not EU policy. The distance between those two is where the fight sits.

The profits-only system Europe already runs

When the EU froze Russian central-bank reserves in 2022, it did not seize the assets themselves. The bonds and cash deposits remained formally Russian-owned, but they kept producing money. Interest accrued, coupons matured, and the EU built a mechanism to skim those profits and send them to Ukraine, while leaving the principal untouched (Council, EUR-Lex).

On 3 August, the EU transferred €1.4bn from those profits, bringing the total to €8bn since the scheme began (EEAS, Euronews). Most of the money, 95%, helps Ukraine service G7 loans. Only 5% is channelled through the European Peace Facility for military support (Commission Representation in France).

The G7 arrangement is a piece of financial engineering: Ukraine receives money now, while future profits from the immobilised Russian assets help repay the lenders over time (G7 Apulia communiqué). It works because it stays on the safer side of the legal line. But it is still built on income, not on the €210bn itself. Set against Ukraine's war and reconstruction costs, €8bn is useful but limited. That gap is why the pressure to touch the principal keeps returning.

What custody would change — and why Belgium is blocking

Almost all the frozen Russian reserves are in one place: Euroclear, the Brussels-based institution that records ownership of securities and settles trades between buyers and sellers. Around 90% of the EU's frozen Russian assets are held there (EUobserver).

That gives Belgium a level of practical power that is unusual even by EU standards. Any step beyond taking profits, whether custody transfer, seizure, or some new use of the principal, needs Belgian cooperation because the assets sit inside Belgian financial infrastructure. If Belgium refuses, the plan cannot move.

The proposal would shift the reserves out of Euroclear and into a new EU-controlled body. Russia's central bank would remain the formal owner, so the authors present the plan as administration rather than confiscation (FAZ, Fakti). In practice, the issue is who carries the risk. At the moment, Belgium and Euroclear are absorbing the legal and operational consequences of a decision taken politically by all 27 EU governments.

That risk is already visible. In July, a Moscow appeals court upheld an 18.17 trillion-ruble order against Euroclear in a case brought by Russia's central bank (Washington Post, Brussels Times). The ruling cannot be enforced under Belgian law, but it shows Moscow's target: the institution holding the reserves, not the EU as a collective actor. Belgium's caution is not softness on Russia. It is the response of a small state being asked to carry a bloc-wide liability on its own balance sheet.

For Malta, the Belgian argument is not hard to understand. Small member states know what it means when EU decisions are formally collective but the risk lands in a particular jurisdiction, regulator, or sector. In Malta's case, that is often financial services, where assets exceed 500% of GDP and reputational pressure from Brussels can quickly become domestic policy. Belgium is making the same structural point from a different corner of the single market.

The legal line Europe has not crossed

The distinction between profits and principal matters. International law gives central-bank assets stronger protection than almost any other form of sovereign property (UN Convention on State Immunity). Using profits generated after the freeze targets income that did not exist before the sanctions. Taking custody of the principal affects property that belonged to Russia before the full-scale war began.

The custody plan tries to move around that line. Moscow would remain the owner on paper, but the EU would control the assets. The harder question is how other central banks read that move in practice. If reserve managers conclude that assets held through European systems can be shifted by political decision, some may reduce their exposure to the euro. The ECB has acknowledged the wider risk that sanctions-related measures could affect the international role of European financial infrastructure, though it has not named this custody debate directly.

Poland and the Baltic states would welcome a "Russia pays" framework that reduces pressure on their own budgets. Belgium and Euroclear face legal exposure that no proposal has properly neutralised. Ukraine receives money under either model, but the scale depends on whether Europe crosses from profits into principal. For now, the EU's answer remains: profits yes, principal no. Three former officials want to change that. The 27 governments have not.