The European Union’s high-stakes strategy to leverage hundreds of billions in frozen Russian capital to prop up Ukraine’s defence has hit a critical roadblock, with Belgium warning that the move could torpedo fragile diplomatic openings aimed at ending the conflict.

Belgian Prime Minister Bart De Wever has intervened directly in the debate, cautioning that the immediate liquidation or repurposing of Russian sovereign assets could remove a vital bargaining chip just as the nearly four-year war enters a decisive phase.

Belgium’s stance is the linchpin of the entire operation. The country finds itself at the centre of this geopolitical storm because the vast majority of the assets, roughly €190 billion ($220 billion), are held by Euroclear, a Brussels-based financial services company that serves as one of the world's most critical settlement houses.

The Peace Deal Dilemma

"Hastily moving forward on the proposed reparations loan scheme would have, as collateral damage, that we as the EU are effectively preventing reaching an eventual peace deal," De Wever wrote in a letter to European Commission President Ursula von der Leyen, seen by Reuters.

The intervention highlights a growing rift within the bloc as the war drags towards its fourth year. While hawkish nations in the Baltics and Eastern Europe have pushed for the full confiscation of Russian funds, Western European capitals have remained wary of legal precedents and the stability of the Eurozone.

A man walks next to a damaged building, amid Russia's attack on Ukraine, in Mykolaiv, Ukraine November 27, 2025. REUTERS/Stringer

Reuters

At a summit last month, EU leaders attempted to finalise a plan to use €140 billion ($162 billion) of these assets as collateral for a loan to Kyiv. However, they failed to secure backing from Belgium, which fears it will be left solely responsible for the legal and financial fallout.

Systemic Risks and Reparations

De Wever’s objection is twofold: the timing of the move relative to potential peace negotiations, and the systemic risk to the global financial architecture.

"The proposed reparations loan scheme is in my view fundamentally wrong," De Wever stated, arguing that under international law, immobilised assets are traditionally dealt with during post-war settlements as part of reparations by the losing party, not utilised while hostilities are active.

The Belgian government is acutely concerned about the exposure of Euroclear. Moscow has previously threatened to seize Western assets trapped in Russia and launch infinite litigation against the Belgian clearinghouse, potentially destabilising a pillar of the global financial system.

A Race Against Time

The letter comes as the European Commission prepares to address Belgium's concerns in draft legal proposals, which officials suggest could be presented this weekend.

The clock is ticking for Kyiv. Von der Leyen has championed the asset scheme since September to plug Ukraine’s widening financing gap for 2026, particularly as many EU member states face domestic pressure to stop taking on new mutualised debt to fund the war effort.

Apart from the funds immobilised in Belgium, an estimated €25 billion of Russian assets are frozen in EU banks elsewhere, mainly in France and Luxembourg.

Belgium has previously insisted that any confiscation scheme must be backed by the entire G7—including the United States, Britain, and Japan—to share the legal risk, rather than leaving the EU, and specifically Brussels, to bear the brunt of Russian retaliation.

The Commission hopes to force a breakthrough at the upcoming summit of EU leaders on December 18-19.

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