Or: How Belgium’s bankers proved more powerful than European solidarity, by Simon Pearson.

The European Union wanted the world to believe it had found an elegant solution to Ukraine’s funding crisis: seize Russia’s frozen assets (€210 billion sitting immobilised across the continent) and use them to back a massive loan to Kyiv. A moment of clarity. A demonstration that when push comes to shove, Western institutions can act decisively against a hostile power waging war on their doorstep.

They bottled it.

Instead, early Friday morning in Brussels, after weeks of theatrical negotiation, EU leaders announced they would fund Ukraine through a conventional loan backed by the EU budget. €90 billion over two years. Substantial, certainly. Necessary, absolutely. But not what they promised. Not what the moment demanded. And not what would have sent the signal that Russian aggression carries material consequences beyond the performative sanctions regime that has defined the West’s response since 2022.

The reason? Belgium (more specifically, the financial institutions holding most of those frozen Russian assets) refused to accept the risk. Legal liability. Potential Russian retaliation. The possibility that Moscow’s courts might rule against European seizure and Belgium would be left holding the bag. The usual concerns of capital when asked to bear even theoretical risk in service of political necessity.

So here we have the EU, that grand project of post-war liberal internationalism, backing down. Again.

The Long 1980s Strikes Again

This is not a story about Belgian intransigence. Belgium is simply where the contradiction became impossible to ignore. This is about the structural incapacity of neoliberal institutions (institutions hollowed out by four decades of prioritising capital mobility over political sovereignty) to act when doing so threatens the inviolability of financial flows.

The Long 1980s, that period of systematic institutional decomposition that began with Thatcher in 1979 and continues today, rests on a fundamental premise: capital must remain mobile, protected, and beyond the reach of democratic politics. National governments surrendered regulatory power. Public institutions were gutted. The welfare state was dismantled. All in service of creating an environment where capital could flow freely, accumulate without constraint, and operate outside political accountability.

The EU is the apotheosis of this project. A supranational body designed not to exercise power but to prevent its exercise. A structure that enshrines capital mobility as constitutional principle whilst treating democratic sovereignty as a threat to be managed. This is why the EU can impose brutal austerity on Greece (political punishment for fiscal deviance) but cannot seize Russian assets to fund Ukraine’s defence. The former reinforces capital’s power. The latter threatens it.

What Belgium Really Means

Belgium’s position is perfectly rational within the logic of financialised capitalism. The frozen Russian assets are not held by Belgium in any meaningful political sense. They are held by Euroclear, a Belgium-based financial institution that operates the international settlement system. Euroclear exists to facilitate capital flows. Its entire business model depends on the perception that assets held within its systems are inviolable: that political considerations will not interfere with the smooth operation of international finance.

If the EU seized Russian assets held by Euroclear to back Ukrainian loans, it would establish a precedent. That European financial institutions can be compelled to subordinate their function to political imperatives. That capital held within European systems is subject to European political authority. That the international financial order is not, in fact, beyond the reach of sovereign power.

This is precisely what cannot be allowed to happen. Not because of Belgian nationalism. Not because of legal technicalities. But because it would undermine the fundamental architecture of neoliberal globalisation: the principle that capital is sovereign and politics subordinate.

Belgium was not alone in its reluctance. Hungary, that Russian cuckoo in the European nest, has spent years obstructing EU action on Ukraine whilst Orbán openly courts Moscow. But here the EU reveals another layer of institutional rot: through enhanced cooperation provisions, Czechia, Hungary, and Slovakia are exempted from any financial obligations under the loan arrangement. Hungary blocks meaningful action, escapes the consequences, and the EU calls this solidarity. Twenty-five member states supposedly support the Ukraine text. Two do not. And the union accommodates the dissenters rather than confronting them.

The difference is instructive: Hungary blocks from ideological alignment with Russian authoritarianism and cynical domestic political calculation. Belgium blocks because seizing Russian assets threatens the fundamental operations of international finance. One is a rogue state within the union. The other is the system protecting itself. And the EU, unable to discipline either, simply carves out exemptions and declares victory.

The Linguistic Gymnastics of Evasion

Read the EU’s own conclusions carefully. They speak of a “reparations loan based on the cash balances linked to Russia’s immobilised assets.” This is what they have been promising for months: a loan mechanism that would use Russian money to fund Ukrainian defence. But in the next breath, they announce the loan will actually be “based on EU borrowing on the capital markets backed by the EU budget headroom.”

These are not the same thing. They are opposites. One uses Russian assets. The other uses European taxpayer commitments. But the EU cannot bring itself to admit the switch openly, so it engages in linguistic contortions that would embarrass a corporate press release. They are still calling it a reparations loan whilst simultaneously explaining it will be funded through conventional EU borrowing mechanisms.

Notice the careful phrasing about repayment: Ukraine will repay the loan “only once Russia compensates Ukraine for the damage caused by its war of aggression.” Which is to say, never. Russia will not pay reparations. Everyone knows this. So what they have created is a grant to Ukraine funded by the EU budget, but they cannot call it that because doing so would require confronting the decision not to seize Russian assets directly. So instead we get this baroque construction where Ukraine owes a debt that will never come due, backed by Russian assets that will never be touched, funded by European money that will eventually mean cuts elsewhere.

The conclusions add that “Russia’s assets will remain immobilised and the EU reserves the right to use them to repay the loan, in accordance with EU and international law.” Reserves the right. Future tense. Conditional. They could not do it now, so they promise they might do it later. This is not policy. This is face-saving.

The Alternative: Austerity by Other Means

So the EU falls back on its budget. €90 billion that will not come from Russian assets but from member state contributions. Money that could fund social housing, public healthcare, education, infrastructure. Money that will instead service a loan to Ukraine whilst Russian assets sit frozen but untouched, generating interest for the financial institutions holding them.

The statement from António Costa, President of the European Council, is instructive: “This will address the urgent financial needs of Ukraine.” Present tense. Urgent needs. Not long-term reconstruction. Not reparations. Not justice. Urgent needs. The language of crisis management, of stopgap measures, of kicking the problem down the road whilst avoiding any action that might threaten the deeper structures of financial capitalism.

Here is where we get to what is not said: that using the EU budget means this cost will eventually fall on European workers and the European working class through reduced social spending, through austerity measures justified by fiscal necessity, through the thousand small cuts that have characterised EU economic policy since 2008. The money will flow to Ukraine (necessary and just) but the cost will be borne by those who can least afford it whilst Russian assets remain pristinely protected.

Hungary, meanwhile, pays nothing. Slovakia pays nothing. Czechia pays nothing. The enhanced cooperation mechanism ensures that opposition to supporting Ukraine carries no financial penalty. You can obstruct EU foreign policy and be rewarded with exemption from its costs.

The Frozen Asset Farce

The EU has supposedly frozen €210 billion in Russian assets. On 12th December, just days before this summit, the Council decided “to prohibit transfer of immobilised Central Bank of Russia assets back to Russia.” Immobilised indefinitely. Permanent freeze. Strong language. Decisive action.

But what does this mean in practice? The assets remain held by European financial institutions. They continue to generate returns. They exist within the international financial system, legally protected and technically operational. They are frozen only in the sense that Russia cannot currently access them, but the institutions holding them can profit from them, and Russia retains legal ownership.

This is not seizure. This is not even sanction. It is the EU performing toughness on Russia whilst ensuring that no actual damage is done to the sanctity of international capital flows. The assets remain frozen indefinitely (a face-saving measure they trumpet as progress) but frozen is not seized. Frozen is reversible. Frozen is safe.

Seizing the assets and using them to fund Ukraine would have been irreversible. It would have been actual punishment. It would have demonstrated that waging aggressive war in Europe carries material consequences beyond frozen bank accounts that might be unfrozen in future negotiations. It would have been an exercise of sovereign power over capital.

Which is precisely why it could not happen.

The Timeline of Paralysis

The European Council met on 23rd October 2025 and agreed to address Ukraine’s “pressing financing needs for the next two years.” Pressing needs. Urgent situation. Immediate action required. That was two months ago.

Since then, nothing. Or rather, weeks of negotiation that produced a half-measure backed by linguistic evasion and structural exemptions for the very states blocking more decisive action. Two months to arrive at a solution that could have been implemented in two days if the political will existed. Two months during which Ukraine continued fighting, continued dying, continued burning through resources whilst European leaders argued over whether Belgian financial institutions might face theoretical legal liability for seizing Russian assets.

The conclusions proudly note that they have “adopted exceptional, temporary and duly justified emergency measures to immobilise Russian assets on a more sustained basis.” This is the language of institutional paralysis disguised as action. Emergency measures to sustain immobilisation. Not to seize. Not to use. To immobilise. To keep things exactly as they are whilst calling it progress.

Meanwhile, they “called on the Council and the Parliament to continue working on the technical and legal aspects of the instrument establishing a reparations loan based on the cash balances linked to Russia’s immobilised assets.” Continue working. Future tense. The thing they just failed to do, they promise to keep trying to do. Perhaps next time. Perhaps when the legal technicalities are resolved. Perhaps when Belgium feels more comfortable. Perhaps never.

Trump, the EU, and Civilisational Erasure

The timing is grimly appropriate. Trump’s national security strategy recently warned that Europe faces “civilisational erasure,” charging that the EU “undermines political liberty” and national sovereignty. For once, Trump’s instinct is accidentally correct, though not for the reasons he imagines.

The EU does undermine national sovereignty, but not through immigration or transnational bodies in the abstract. It undermines sovereignty by subordinating political power to capital mobility. By making democratic decision-making subject to fiscal rules, market confidence, and the interests of international finance. By ensuring that political choices that threaten capital accumulation become structurally impossible.

This is what the frozen assets debacle reveals. The EU cannot act decisively to support Ukraine not because of clunky structures or diverse voices (the usual liberal hand-wringing about democratic complexity) but because doing so would require exercising political power over capital. And that is precisely what the EU’s institutional architecture is designed to prevent.

Trump will use Europe’s weakness to justify American unilateralism. He will paint himself as the decisive actor whilst Europeans dither. And he will not be entirely wrong. But the weakness he identifies is not cultural or civilisational. It is structural. It is the built-in incapacity of neoliberal institutions to subordinate capital to political action.

The Cost of Cowardice

Friedrich Merz, the German Chancellor, offered the standard platitude: “Putin will only make concessions once he realises his war will not pay off.” But Putin has just learned the opposite lesson. He has learned that Europe will not seize his assets. That the sanctity of international finance trumps geopolitical necessity. That he can wage war on Europe’s doorstep and Europe’s institutions will ensure his wealth remains protected within their systems.

He has also learned that Hungary can obstruct European unity with impunity, that a member state can operate as Moscow’s agent within EU structures, and that the union has no mechanism to expel or discipline states that actively undermine its collective security interests. Orbán has turned Hungary into a spoiler, vetoing sanctions, blocking aid, and providing Putin with a European foothold. Which means the EU, constrained by its own requirement for unanimity on foreign policy and its willingness to grant exemptions through enhanced cooperation, can do nothing but watch and accommodate.

The conclusions “strongly condemned Russia’s continued large-scale attacks on civilians and civilian targets in Ukraine, including infrastructure, hospitals, medical facilities and the energy system.” Strong condemnation. Stern language. Moral clarity. And Russian assets remain untouched, generating returns for European financial institutions whilst Ukraine’s energy infrastructure burns.

€90 billion for Ukraine is substantial. It is necessary. It will keep Ukraine funded through 2027. But it is also a missed opportunity: a moment when Europe could have demonstrated that the post-war liberal order still retains the capacity for decisive action when its purported values are threatened. Instead, it demonstrated the opposite.

Belgium did not kill the frozen asset plan. The structural logic of financialised capitalism killed it. Belgium was simply the point where that logic became impossible to ignore. Hungary, meanwhile, continues its work as Moscow’s instrument, a reminder that the EU’s weakness is not just economic but political: a union that cannot discipline its members, cannot override their vetoes when collective survival is at stake, and cannot even require them to share the financial burden of decisions they oppose.

What This Reveals

The EU’s retreat on frozen Russian assets is not a surprise, it can’t be. Neoliberal institutions prioritise capital protection over political action. Always. They treat financial stability as more important than geopolitical necessity. Always. They ensure that even when faced with existential threats (war on the continent, authoritarian aggression, the collapse of the post-war security order) capital remains inviolable. Always.

This is the legacy of the Long 1980s. Not just the destruction of public institutions, not just the gutting of the welfare state, but the systematic subordination of political power to economic imperatives. The creation of institutions that cannot act decisively because doing so would threaten the mobility and security of capital.

Volodymyr Zelensky welcomed the decision as “significant support that truly strengthens our resilience.” He is correct to take what is offered. Ukraine needs the money and cannot afford to refuse it over questions of financing mechanisms. But he, and we, should understand what this moment reveals: that when push comes to shove, when the choice is between supporting Ukraine and protecting Russian assets held within European financial systems, the EU will choose the latter. Not because of Belgian obstinacy. Not because of legal complexity. Not even because of Hungarian sabotage. But because the entire institutional architecture of contemporary European capitalism is built on the principle that capital must remain sovereign.

The €90 billion will flow. Ukraine will be funded through 2027. The EU will trumpet this as solidarity, as commitment, as proof of European unity. And Russian assets will sit frozen but protected, generating returns for European financial institutions, legally intact and politically untouchable. The linguistic gymnastics will continue. The enhanced cooperation exemptions will shield the obstructionists. The promise to maybe use Russian assets someday will remain just that: a promise, deferred, conditional, ultimately hollow.

The war continues. The institutions remain decomposed. And capital, as always, comes first.

Simon Pearson writes at Anti-Capitalist Musings on Substack, where this article first appeared.

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