Fen Osler Hampson, Allan Rock and Tim Sargent
Belgium’s legal and liability concerns have stalled the European Union’s plan to tap frozen Russian assets for Ukraine. This paper argues that a lien-based approach coupled with a shared EU-G7 indemnification scheme could break the impasse by offering a structured, enforceable alternative that preserves legality and distributes risk.
A conditional, first-priority lien would only be triggered if Russia fails to honour reparations, thereby enabling financing for Ukraine without permanent confiscation or unlimited liability for Belgium.
This approach directly addresses Belgium’s worries about concentrated liability exposure and potential lawsuits, while offering the EU and G7 partners a credible path to sustain Ukraine support and maintain financial credibility in international markets. If embraced, such a mechanism could serve as a consensus-building framework among EU member states, Belgium, and Euroclear, potentially unlocking liquidity for Ukraine.
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Executive Summary
The European Union’s (EU) current forced loan scheme to mobilize frozen Russian sovereign assets to support Ukraine has stalled because of Belgian concerns over concentrated liability exposure and unresolved legal risks.
This paper argues that one way to address those risks and potential liabilities is to place a lien or encumbrance on these funds. As policymakers explore ways to strengthen the financial and legal credibility of future reconstruction financing, a lien-based mechanism could serve as a structured, rules-based alternative to outright confiscation or perpetual immobilization.
Although we continue to believe outright confiscation and repurposing is both legally defensible and obviously much simpler, we offer this proposal as a potential option to break the current impasse about a loan mechanism.
Under such a framework, the European Union and its G7 partners would establish a conditional, first-priority lien on immobilized Russian state assets held primarily in Euroclear (Belgium)—a lien that would be activated only if Russia fails to pay reparations established through an international settlement or ruling.
This approach would preserve legality and proportionality under international law, provide collateral credibility for large-scale loans to Ukraine, protect Belgium and Euroclear from asymmetric litigation risks, and enable an indemnification framework to distribute legal and financial risk among participating states.
