The boxy glass and steel tower at a traffic-clogged junction on King Albert II Boulevard hardly stands out among the other buildings in the business district of north Brussels, the Belgian capital’s answer to Manhattan or La Défense in Paris.
But unlike its neighbours, the institution housed in this bland postmodern building opposite a branch of Domino’s Pizza is caught up in a geopolitical maelstrom. It is Euroclear, a little-known body that houses most of the Russian state’s frozen assets and now finds itself in the middle of a debate about international justice.
Amid uncertainty about Donald Trump’s commitment to Ukraine, calls are growing to confiscate Russian central bank assets that were frozen after the full-scale invasion. Euroclear holds €183bn of Russian sovereign funds out of an estimated €300bn immobilised in western countries.
In March, about 130 Nobel laureates, including the peace prize winner Oleksandra Matviichuk, called on western governments to release the €300bn to rebuild Ukraine and compensate war victims. “This might require new regulations and laws, which, given the undeniable emergency and gross violations of international law, are appropriate and must be amended,” stated the letter, which was signed by some of the world’s leading economists, scientists and writers.
Under EU law, profits from the Russian funds are used to aid Ukraine, and the next amounts will be revealed when Euroclear announces quarterly results on Wednesday. But the windfall profits – an estimated €2.5bn-€3bn a year – are modest when set against the €506bn that Ukraine needs for reconstruction over the next decade. (Since that estimate was published by the World Bank in February, Russia’s deadly missile strikes have continued to wreak a devastating toll.)
The EU’s most senior diplomat, Kaja Kallas, has backed the idea of using the assets, as have the foreign ministers of Poland and Lithuania. “Putin has already written off the €300bn assets, he does not expect to get them back. But he also doesn’t think we have the fortitude to take hold of them either. So far, we have proven him right,” said Poland’s foreign minister, Radek Sikorski, last June.
But for Belgium’s prime minister, Bart De Wever, confiscating the assets would be “an act of war”. Johan Van Overtveldt, a former Belgian finance minister who is De Wever’s political ally, said outright seizure of the assets would be “really playing with fire for the rest of the financial and economic system”.
“Endangering the normal functioning of Euroclear would be a huge problem for the entire European economy, if not for the world economy,” he said.
Euroclear, a Belgian-based international institution, fears it could be sued by the Russian government, while Belgian officials worry that confiscation would trigger a cascade of withdrawals. The end-point of that could even be the collapse of Euroclear, which would be a massive problem for the indebted Belgian government.
Belgium holds a 13% stake in Euroclear and funds its war aid to Ukraine – including €1bn announced in April – from corporate tax take on the profits of the Russian frozen funds. France, which has an 11% stake in Euroclear, is also worried about seizing the assets.
Van Overtveld has another idea: instead of confiscation , he proposes using the assets as collateral to set up “more elaborate finance” for Ukraine. “It is complex, but it’s doable, and it does not lead to the same kind of legal issues that you would have if you go for outright seizure.”
Euroclear emphasises its neutrality. “It is not our role as a neutral financial institution to decide what to do with those [Russian] assets,” said head of communications, Pascal Brabant. “It will be necessary that any agreement avoids undermining confidence in international financial markets by safeguarding the legal order and legal certainty which underpin global economies.”
Often described as a bank for banks, Euroclear traces its roots to the late 1960s, when it grew out of the Brussels office of the Morgan Guaranty Trust Company of New York, which later became JP Morgan. At a time when financial transactions were speeding up, Euroclear enabled the electronic exchange of cash and securities (a stock, a bond or some other instrument to raise capital), rather than moving around piles of paper.
Today, Euroclear handles a mind-boggling amount of money – every four weeks it claims to process transactions equivalent to global GDP, or €1.3 quadrillion (meaning 1.3 plus 14 zeros) a year. None of this is held in cash. But Euroclear is security conscious. At its headquarters a pair of security cameras are trained on every corner.
Euroclear’s agreement with the Russian government dates back to October 2012. A few months earlier Vladimir Putin had secured a third term in office and cracked down brutally on opposition forces that had mounted unprecedented protests against his rule, but Russia’s integration into the global economy was marching on.
At the time Russian banks were looking for connections to western investors. “Probably all Russian brokers, banks, and even the Russian state held funds through Euroclear,” said Roeland Moeyersons, a business lawyer based in Brussels.
Moeyersons has some Russian clients whose assets or savings are blocked at Euroclear despite the individuals not being sanctioned. His typical client is a millionaire, who fulfils “all the cliches”, he said. “They have a house in Switzerland, one in Russia, a flat in Monaco, Marbella, London or Dubai, and now they are confronted by the fact that a couple of millions of their investments are frozen.”
According to the Belgian newspaper De Standaard, Euroclear holds €70bn in private Russian assets, beyond the €183bn sovereign funds at the centre of the confiscation debate.
On behalf of his clients, Moeyersons is calling on Belgium’s treasury to release their assets. While he represents a few Russian billionaires who are challenging their designation on the EU sanctions list, most of his clients are people “who made a small fortune running a legitimate business” and had their assets frozen “as collateral damage of the EU sanctions,” he said.
Meanwhile, the debate on the frozen sovereign billions continues. On Tuesday Sweden’s minister for finance, Elisabeth Svantesson, said she supported using the assets and giving Kyiv the right to decide how to spend them. “Of course we need to remain united among our countries, but we are pushing for using them [the frozen funds] in other ways, not only the windfall but also the assets,” she said.
Svantesson was speaking alongside Torbjörn Becker, director of the Stockholm Institute of Transition Economics, who said transferring the frozen assets to Ukraine would allow Kyiv to buy more weapons and bring economic stability. “If we were to send the whole amount of these frozen assets to Ukraine they would have predictable long-term financing at the level that matters,” he said. “We should definitely consider transferring all of the frozen assets to Ukraine sooner, rather than later. This is not less important now with [Donald] Trump in the White House.”
