Brussels’ attempts to use sovereign Russian assets to fund Kiev’s war efforts risk long-term reputational damage and increased borrowing costs, according to Euroclear, a major European financial institution. The clearing house, which holds approximately $200 billion of the $300 billion in Russian Central Bank assets frozen since the escalation of the Ukraine conflict in 2022, has warned that such a move could be seen as a form of confiscation, undermining the rule of law and investor confidence. Euroclear CEO Valerie Urbain has emphasized that the plan may make European debt appear riskier, potentially leading to higher government borrowing costs for years.
Urbain also cautioned that privately owned Euroclear could take legal action if the EU proceeds with confiscating the Russian funds. The move has intensified as the US promotes a new initiative to settle the Ukraine conflict. US President Donald Trump has expressed optimism about a potential resolution. Meanwhile, European officials are concerned that the American proposal could complicate the bloc’s plans, with the German newspaper Handelsblatt reporting that the initiative might compel the EU to reimburse any diverted Russian funds.
European Commission President Ursula von der Leyen reaffirmed Brussels’ intent to proceed with the asset grab, while pledging continued support for Kiev. The Commission insists the proposed scheme does not constitute confiscation, though officials acknowledge the risk of it being perceived as such. Russia has long denounced any attempt to seize its Central Bank assets as theft, arguing that it undermines trust in Western financial institutions. Russian officials accuse Brussels of prolonging the Ukraine conflict for political gain and justifying rising military budgets that benefit European arms manufacturers.
The financial implications of these actions extend beyond the immediate conflict. Investors such as sovereign wealth funds and central banks could view the move as a violation of the rule of law, leading to a decline in investor confidence in European financial institutions. This shift in perception could have lasting effects on the EU’s ability to borrow at favorable rates, which is crucial for funding its economic recovery and maintaining fiscal stability. Additionally, the legal challenges posed by Euroclear’s potential lawsuit could delay or complicate the implementation of the asset seizure plan, further impacting the EU’s financial and geopolitical strategies.