EU Finally Does the Most Obvious Thing: Uses Loan Instruments to Excavate Capital from Seized Russian Assets
- john raymond
- Sep 21
- 2 min read
The debate over how to leverage the hundreds of billions in immobilised Russian sovereign assets has always been defined less by economics and more by law and politics.
From the start, one obvious solution existed: do not attempt outright confiscation, but instead create a structured loan, collateralised or serviced by the assets, which Russia would eventually have to repay in order to regain access.
Such an instrument allows Europe to extract value today without violating sovereign immunity or breaking down the legal system it is trying to defend.
Thankfully, the European Union has finally, if belatedly, converged on this path.
When Russia’s invasion of Ukraine triggered sanctions in 2022, Western governments froze roughly €260 billion of the Russian central bank’s reserves, of which about two-thirds are held in Europe. The most liquid portion—Euroclear’s cash balances—quickly became a tantalising target for Ukraine’s supporters.
Yet confiscation ran into obstacles: sovereign immunity doctrine, fears of reciprocal seizures by other states, and the reality that breaking property law for an adversary would undermine its credibility for allies and neutral investors alike. This legal deadlock created years of handwringing, with one half-measure after another.
The solution was always obvious. I understood it—and I am not a financial guy.
Primarily: control creates leverage. If the EU controls the assets, it can borrow against them without worrying that they will be withdrawn by Russia. This means that the profits of the assets—interest and coupon payments—can be captured and earmarked to service loans.
But more importantly, the assets themselves, in cash form, can be mirrored into zero-coupon EU paper, with an obligation that Russia eventual settles the principal.
This way Ukraine gains resources today, while Europe avoids breaking its own laws. And Russia cannot recover its reserves, not without first paying its accrued war debts. This is solid financial engineering married to strategic purpose.
The EU has at last moved decisively in this direction. First came the G7’s loan serviced by asset profits, operational since mid-2025. Now, Brussels is advancing a reparations-loan design that uses the immobilised balances themselves as the backstop. This instrument creates immediate liquidity for Ukraine while maintaining the fiction of ownership and the reality of control.
This is the exact pathway that should have been taken from the outset: extract value without full seizure, then structure repayment as reparations. This locks Russia into a financial trap: replaying the loan becomes their legal responsibility.
That it took this long is testament to the EU’s political hesitancy and lack of long-term planning. Years were lost to debate, while Ukraine bore the cost in blood and infrastructure. The delay shows how slowly Europe moves when forced to innovate within its own legal order.
But still the fact remains: the EU has now crossed the Rubicon. Loans against the seized assets are no longer just good theory—they are policy.
Russia’s war chest is being turned into Ukraine’s survival fund, and in financial terms, Moscow is already mortgaging its future for a war in Ukraine that look increasingly unwinnable for them.
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