Eh…. it’s complicated.
The plan is not literally to take the cash out of Euroclear and give it to Ukraine. The idea is a bit complicated, but the gist of it is that the EU will use back-to-back finance to make a loan to Ukraine which is leveraged against the assets. And Russian cannot get its assets back until it agrees to pay reparations to Ukraine, which Ukraine will then use to repay the loan. So there is a bit of financial wizardry going on deliberately so that they are not specifically either taking the Russian assets or getting Euroclear to hand them over.
However, financial sophistry doesn’t fool everyone. Or, possibly, anyone. In all but name this will be taking Russian assets and using them to fund Ukraine’s war effort. And Euroclear and Belgium are (not unreasonably) terrified that this will destroy their carefully crafted reputation as a safe place to clear investments as well as putting them in Russia’s crosshairs. After all, if the EU can basically help itself to Russian assets when the political winds change, how do you think Chinese investors, or Nigerian investors, or Venezuelan investors, or Indian investors are likely to feel about that? Heck, even US investors might get slightly cold feet about this newfound political risk, and prefer to keep their assets outside Euroclear instead.
There is also a ton of legal risk floating around this. For one thing, a lot of these sanctions may not stand up fully under judicial scrutiny once the war ends. The Russian state? Sure. However that is only a small fraction of the assets. But the Russian oligarchs - some of whom have never been involved in politics? Are those sanctions alleging that those individuals are “an arm of the Russian state” really going to stand up? The Belgians are not alone in worrying that many of them may not. Unlike Russia, the EU has independent courts where the human rights (including the right to their property) of Russians are safeguarded and protected. And Russian oligarchs just love litigation… For another, Putin-friendly Hungary stands waiting in the wings to veto things down the line - after the money goes out, but before it comes time to pay it back. For a third, the US absolutely hates this idea, which doesn’t make life any easier.
My gut feeling is that Belgium is ultimately going to get steamrollered on this one. There is an usual sense of resolve amongst the main EU capitals that, in this case, rules need to be bent. But I absolutely understand why the Belgian government and Euroclear are not happy at all. The chances of them getting burned on this are definitely not zero.
A crisis over using frozen Russian assets to help Ukraine
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