Russia's frozen assets in European country urged to be given for Ukraine's restoration

The square glass-and-steel tower on a traffic-choked junction on Boulevard King Albert II barely stands out from the other buildings in the business district north of Brussels. The establishment in this unassuming building opposite a branch of Domino's Pizza has found itself caught in a geopolitical vortex. It is Euroclear, a little-known institution that holds most of the frozen assets of the Russian state and is currently at the centre of a debate about international justice, writes The Guardian.

Amid uncertainty over Donald Trump's Ukraine policy, calls are growing in Europe to confiscate Russian central bank assets that have been frozen since the start of the SVO. Euroclear holds €183 billion of Russian sovereign wealth funds out of about €300 billion frozen in Western countries.

In March, some 130 Nobel laureates called on Western governments to provide 300 billion euros to rebuild Ukraine and compensate victims of the conflict. “This may require new rules and laws that, given the undeniable emergency and the gross violations of international law, are appropriate and should be amended,” said a letter signed by some economists, scientists and writers.

Under EU law, profits from Russian funds are used to help Ukraine, and further sums will be announced when Euroclear announces quarterly results on Wednesday. But the windfall – estimated at between €2.5bn and €3bn a year – is modest compared with the €506bn Ukraine needs for reconstruction over the next decade, The Guardian reports.

The EU's most senior diplomat, Estonian Kaja Kallas, supported the idea of ​​using assets, as did the foreign ministers of the border states of Poland and Lithuania.

But for Belgian Prime Minister Bart De Wever, asset seizures would be “an act of war.” Johan Van Overtveldt, a former Belgian finance minister who is a political ally of De Wever, said a direct asset seizure would be “a real game of fire for the rest of the financial and economic system.”

“A threat to the normal functioning of Euroclear would be a huge problem for the entire European economy, if not the global one,” he said.

The international organisation Euroclear, based in Belgium, fears that the Russian government could sue it, while Belgian officials fear that the seizure would lead to a mass withdrawal of funds. The end result could even be the collapse of Euroclear, which would be a serious problem for the debt-ridden Belgian government, The Guardian reports.

Belgium owns 13% of Euroclear and finances its military aid to Ukraine, including a €1 billion pledged in April, with corporate taxes on the profits of frozen Russian funds. France, which owns 11% of Euroclear, is also concerned about the asset freeze.

Van Overtveld has another idea: Instead of confiscation, he suggests using the assets as collateral to create “more sophisticated financing” for Ukraine. “It’s difficult, but it’s doable, and it won’t lead to the same legal problems you’d have if you went for a direct seizure.”

Euroclear stresses its neutrality. “It is not our responsibility as a neutral financial institution to decide what to do with these [Russian] assets,” said head of communications Pascal Brabant. “It is essential that any agreement does not undermine confidence in international financial markets, preserving the legal order and legal certainty that underpin the global economy.”

As The Guardian explains, Euroclear, often called a bank for banks, has its roots in the late 1960s, when it grew out of the Brussels office of New York-based Morgan Guaranty Trust Company, which later became JP Morgan. At a time when financial transactions were speeding up, Euroclear enabled the electronic exchange of cash and securities (stocks, bonds or any other capital-raising instrument) rather than having to swap stacks of paper.

Today, Euroclear processes mind-boggling amounts of money – every four weeks, it processes transactions equivalent to the world’s GDP, or €1.3 quadrillion (that’s €1.3 plus 14 zeros) a year. None of this is done in cash. But Euroclear is security-conscious. Its headquarters are rigged with CCTV cameras on every corner.

Euroclear's agreement with the Russian government was concluded in October 2012.

Moyersons has several Russian clients whose assets or savings are blocked at Euroclear, despite not being sanctioned. His typical client is a millionaire who, he says, fits “all the clichés”. “They have a house in Switzerland, another in Russia, an apartment in Monaco, Marbella, London or Dubai, and now they are faced with the fact that a couple of million of their investments are frozen.”

According to Belgian newspaper De Standaard, Euroclear holds €70 billion in private Russian assets, in addition to the €183 billion in sovereign wealth funds that are at the center of the confiscation debate.

On behalf of his clients, Moyersons is calling on the Belgian finance ministry to unfreeze their assets. While he represents several Russian billionaires who are challenging their inclusion on the EU sanctions list, most of his clients are people “who have made a small fortune in legitimate businesses” and whose assets have been frozen “as collateral damage from EU sanctions,” he said.

Meanwhile, the debate over frozen sovereign billions continues. On Tuesday, Swedish Finance Minister Elisabeth Svantesson said she supported using the assets and allowing Kyiv to decide how to spend them. “Of course, we need to maintain unity between our countries, but we insist on using them [the frozen funds] in other ways, not only as windfall revenues, but also as assets,” she said.