Andy J. Semotiuk
October 23, 2025
Forbes
For nearly three years, European leaders have discussed how to unlock Russian frozen assets held in Western banks to support Ukraine’s defence and rebuilding efforts. Each time, the plan neared agreement—only to stall just before the finish. Now, with Donald Trump back in the White House and U.S. aid halted, Europe faces a critical choice it can no longer delay.
The Reparations Loan
European Commission President Ursula von der Leyen has proposed a €140 billion “Reparations Loan” for Ukraine—secured by immobilized Russian central-bank assets mainly held at the Belgian depository Euroclear. The reasoning is convincing: Russia’s invasion caused severe damage, its reserves remain inactive under Western control, and Ukraine’s survival depends on new financing.
But Belgium, where Euroclear is located, is hesitating. Brussels fears being left legally and financially vulnerable if Moscow sues for expropriation. That dispute—over who bears Europe’s collective liability—has delayed the only policy capable of keeping Kyiv solvent and sustaining support through 2026.
The Scale of the Freeze
Since Russia’s full-scale invasion in February 2022, the West has frozen an estimated $335 billion in Russian sovereign and private assets—cash, bonds, equities, real estate, even yachts. Of this, approximately €200 billion belongs to the Central Bank of Russia, held in Euroclear accounts.
These securities continue to pay coupons and mature, generating what Brussels describes as “extraordinary revenues.” By 2024, Euroclear had earned €6.9 billion in annual interest from these blocked holdings. The European Union decided that these windfall profits do not count as sovereign property and can therefore be taxed and redirected to Ukraine—setting a lawful precedent for future transfers.
The Legal Tightrope—and the Precedents That Matter
International law delineates two clear principles: first, a state that commits aggression must provide full reparation; second, central bank assets are protected from seizure. Europe’s challenge is to reconcile these principles.
According to a Center for European Policy Analysis legal roadmap titled Seizing Russian State Assets for Ukraine, three complementary strategies can bridge this gap. The first involves
redirecting windfall profits from frozen Russian reserves. The second proposes using those reserves as collateral for loans to Ukraine. The third strategy would enforce international judgments against non-immune Russian property.
All three depend on temporary, reversible measures under the International Law Commission’s Articles on State Responsibility—meaning they would deny Russia access to its reserves without permanently seizing them. Legal precedent in the Armed Activities on the Territory of the Congo case supports this reasoning. The International Court of Justice’s 2005 ruling and multiple European Court of Human Rights cases confirm that states may impose lawful, time-limited restrictions in response to serious breaches of international law.
Belgium’s concern is clear: if Russia sues, Belgian taxpayers could end up paying. Germany’s new chancellor, Friedrich Merz, has suggested a collective solution—spreading any legal liability among all EU members. In practice, a shared-liability fund or EU-backed guarantee mechanism would protect Belgium while keeping the deterrent effect against Moscow.
Such a step would transform a unilateral act into a multilateral countermeasure—essentially a multi-party indemnification agreement that would be legally more robust than the U.N. Charter and customary international law alone.
Sovereign Immunity and Investor Confidence
Critics warn that seizing sovereign assets could reduce investor confidence in euro-denominated securities. However, the Reparations Loan model avoids this issue. The assets themselves remain frozen; they simply serve as collateral to back loans to Ukraine.
When Russia ends its aggression and pays reparations—consistent with United Nations General Assembly Resolution ES‑11/5—the collateral can be released. This is a temporary, reversible measure, not confiscation.
Furthermore, the windfall profits generated by Euroclear are clearly not Russia’s property. They exist solely because sanctions immobilized the underlying securities. Taxing and redirecting those profits is similar to taxing income earned under EU jurisdiction—not expropriating foreign wealth.
The Economic and Strategic Calculus
Skeptics argue that weakening sovereign immunity could threaten the euro’s reserve currency status. However, the EU’s own ring-fencing rules offer sufficient legal safeguards.
Meanwhile, the G7’s Extraordinary Revenue Acceleration (ERA) framework enhances multilateral legitimacy, and the CEPA model legislation—the Ukraine Extraordinary Revenues and Lawful Reallocation Act—develops harmonized domestic statutes with sunset clauses and transparency rules. Together, they show that Europe can adapt the rule of law to modern warfare without undermining it.
A Mirror Image of Russia’s Own Conduct
Moscow’s moral standing in this debate is nonexistent. In 2022 and 2023, the Kremlin expropriated Western assets under its “unfriendly nations” decrees, seizing stakes from BP, Carlsberg, and others outright. These actions violated international investment treaties and broke Russia’s claim that its own reserves abroad should remain inviolable. If Russia can fund its war machine by stealing Western assets, the West can lawfully support Ukraine’s defence by reallocating Russia’s immobilized reserves. The moral balance is not even close.
The Turning Point: From Freeze to Flow
After years of legal battles, a breakthrough appears imminent. In June 2024, the G7 agreed to lend Ukraine $50 billion, supported by frozen Russian central-bank assets. The repayment will come from the windfall profits generated by these reserves—approximately €3–5 billion each year. As mentioned earlier, Brussels and the G7 are near finalizing a broader agreement—one that could provide up to €140 billion in future reparations loans backed by the same frozen reserves. Euroclear’s holdings remain untouched, but their interest income will cover Ukraine’s debt and aid reconstruction. Essentially, Russia will start paying for its own war crimes through lawful, reversible financial engineering.
This framework—von der Leyen’s Reparations Loan—is Europe’s clearest moral and strategic innovation since the Marshall Plan. It offers predictable funding, adheres to legal constraints, and enforces real consequences for aggression. It is also nearly complete. The political agreement is expected to be finalized before the end of the year, with disbursements beginning in early 2026.
The Global Context—and America’s Absence
The geopolitical message is clear. With the United States retreating under Trump and halting new aid, Europe has been compelled to assume leadership. Canada and Japan have indicated cautious support, but this is now an effort led by Europe. For the first time, Brussels—rather than Washington—is dictating the terms of wartime economic leadership. It marks a significant shift. For decades, Europe’s “strategic autonomy” was mostly empty rhetoric. Today, it is a tangible reality—grounded in legal measures, financial commitments, and moral determination.
From Law to Justice
This debate has never been solely about finance. It’s about whether the international legal order still commands respect in the face of blatant aggression. The emerging compromise—a collective European liability structure combined with lawful asset use—demonstrates that the rule of law can evolve without compromising principles.
As von der Leyen declared, “Russia must pay for the devastation it has caused.” That idea, long delayed, is now finally being put into action.
Europe’s Moment of Truth
The European Union was established to prevent another war on the continent. Allowing Russia to wage one unchecked would betray that purpose. While Belgium’s caution is understandable, the answer lies in collective responsibility. Shared liability, shared purpose, and shared courage are what this moment requires. By acting together, Europe can turn immobilized Russian wealth
into Ukraine’s lifeline and demonstrate that justice, not impunity, still underpins the global financial order.
The Bottom Line
Europe’s near-final agreement to seize Russian frozen assets signals a major shift in geopolitical relations. The move will release €140 billion in funding, strengthen Ukraine’s economy through 2026, and reaffirm Europe’s global leadership as the U.S. diminishes in influence. For investors and policymakers alike, the message is clear: the rule of law is advancing, and the financial system that once protected aggressors is now being reformed to hold them accountable.
Andy J. Semotiuk is an attorney who has covered immigration for Forbes for the last ten years. His focus is on investor immigration. His article about a looming U.S. Immigration shutdown attracted over 1 million readers, and his articles about the U.S. EB-5 investor immigration program and about 11 million undocumented immigrants in the U.S. have attracted a wide readership. A former United Nations correspondent, Mr. Semotiuk has authored four books, two of which have won Peterson Literary Fund awards. He is a member of the New York and California bars in the U.S. and Ontario and B.C. bars in Canada. He practised law in New York for 5 years and Los Angeles for 10 years. Currently he practices U.S. and Canadian immigration law with Pace Law Firm in Toronto. His books are available on Amazon. Links to his guest appearances on podcasts can be found on podcast outlets
