Ukraine’s Jumbo Loan Is Giving Tiny Belgium a Fright

Western allies have frozen some $300 billion in Russian assets since the 2022 Ukraine invasion, the bulk of which is stuck at an obscure yet essential Brussels-headquartered financial clearinghouse called Euroclear Ltd. Yet they have also stopped short of seizing the assets for Ukraine’s benefit, preferring workarounds that don’t break legal and economic taboos. Now this halfway-house approach is reaching its limit, with Euroclear’s homeland Belgium balking at a new jumbo €140 billion ($163.0 billion) loan to Kyiv using the frozen assets as collateral. A new approach is needed.

The legal structure of this proposed loan, publicly endorsed by German Chancellor Friedrich Merz last month, seems straightforward even if the full details aren't known. Russian central-bank assets held at Euroclear, mostly cash from bonds that have matured, would be lent via a zero-coupon bond. The repayment of the loan would be tied to Russian reparations and it would be guaranteed by most, if not all, European Union countries and other willing participants. The European Central Bank has said the plan should abide by international law, preserve financial stability and ensure solidarity, according to people familiar with the matter.