Europe’s Frozen Reserves Gambit
From Renewable Sanctions to Long-Duration Financial Statecraft
Editor’s note: Guest columnist Ivan Savov is Chairman of the European Risk Policy Institute (ERPI). He explores the wide-ranging ramifications of a permanent seizure of Russian assets within the EU, as a result of sanctions related to the war in Ukraine.
Context
Europe has shifted the Russian sovereign-assets file from a renewable sanctions posture into a long-duration instrument of financial statecraft. By moving toward open-ended immobilisation of Russian central-bank reserves held inside EU jurisdictions, Brussels is reducing internal veto exposure and strengthening the policy foundation for multi-year financing designs intended to sustain Ukraine’s fiscal continuity through 2026–2027.
What distinguishes the current phase is not the freeze itself, but its duration and institutionalisation. By shifting from renewable sanctions to open-ended immobilization, Europe is testing how far financial infrastructure can be used as strategic leverage without undermining the credibility of the reserve system it underpins.
The scale is strategically material. Roughly €210 billion in Russian central-bank assets are immobilised in the EU, with a substantial share held through Euroclear, Belgium’s central securities depository. This concentration pulls a geopolitical dispute into the operational core of European market infrastructure, where liability, jurisdiction, and the credibility of settlement systems become part of the conflict terrain.
Recent Developments: Two Moves that Harden the Battlefield
Two developments in mid-December have tightened the feedback loop between Europe’s policy choice and Russia’s response.
First, Russia’s central bank escalated its legal counter-offensive by filing a claim in a Moscow court seeking 18.2 trillion roubles (about $229–230 billion) in damages from Euroclear. The suit frames any plan to derive financial value from immobilised reserves as unlawful and signals an intent to pursue enforcement avenues beyond the EU where opportunities exist.
Second, European leaders met in The Hague to launch an International Claims Commission for Ukraine war damages. The Commission is designed to move from documentation toward adjudication and allocation, building on the Register of Damage established in 2023, which has already accumulated more than 80,000 claims. Reconstruction costs are now cited in the hundreds of billions of dollars, and the Claims Commission is being positioned as a core component of a compensation architecture that could, over time, seek funding pathways connected to frozen Russian assets.
By shifting from renewable sanctions to open-ended immobilisation, Europe is testing how far financial infrastructure can be used as strategic leverage without undermining the credibility of the reserve system it underpins.
Why Indefinite Immobilisation Changes the Strategic Meaning of “Freeze”
A renewable freeze communicates reversibility. It also creates recurring political fragility. Each renewal cycle becomes a pressure point for dissent, bargaining, and veto threat, particularly when fatigue grows and fiscal burdens accumulate.
Open-ended immobilisation changes both. It reduces recurring veto leverage and signals policy endurance. It also increases the likelihood that external actors interpret the measure as structural rather than temporary. Even when officials emphasise the distinction between immobilisation and confiscation, long-duration control of sovereign reserves becomes a signal to global reserve holders that jurisdictional exposure and geopolitical alignment shape asset safety more directly than many assumptions built in the pre-war era.
Financial Plumbing as Geopolitical Surface
Euroclear’s centrality makes the dispute unusually consequential. Sovereign risk can be priced. Legal-retaliation risk aimed at market utilities is harder to price because it is designed to create friction across jurisdictions and over time rather than produce a single decisive outcome.
Euroclear is not merely a Belgian entity; it sits at the centre of Europe’s securities-settlement system, processing trillions of euros in transactions annually. Legal uncertainty at this node would have second-order effects well beyond the Russia file, extending into perceptions of European market neutrality and operational reliability.Russia’s lawsuit should therefore be read as a strategy to expand the battleground. Even if EU courts refuse to recognise Russian judgments, the litigation can be used as a platform for enforcement attempts in third jurisdictions, reputational pressure campaigns, and corporate-structure targeting. The objective is to raise the operational and political costs of Europe’s endurance, and to signal to third countries that the reserve order has entered a contested phase.
Reporting indicates EU officials have explored options under the sanctions framework that could allow central securities depositories to mitigate losses from seizures in Russia by drawing on immobilised Russian assets held in the EU, as a deterrence and infrastructure reassurance measure.
The Reparations Pathway Becomes Institutional
The International Claims Commission shifts the reparations debate from moral demand into administrative process. Administrative process tends to harden into allocation logic. As claims are reviewed and quantified, the political pressure to connect verified damage to real compensation pathways rises.
The more such claims mechanisms mature, the harder it becomes to separate legal accountability from political settlement—narrowing the ambiguity and sequencing flexibility that peace processes often require.
This introduces a second strategic tension. Accountability structures tend to narrow negotiating flexibility. Peace processes often require ambiguity, sequencing, and forms of legal closure. Compensation architectures require clarity, attribution, and enforceability. The coexistence of these logics will shape the settlement space, especially if external actors seek to blend ceasefire diplomacy with reparations commitments.
Strategic Implications for the Reserve Order
The longer immobilisation persists, the more the episode becomes precedent rather than exception. Three implications stand out.
First, jurisdictional exposure becomes a core reserve-management variable. Reserve assets held in adversarial legal environments can be immobilised for extended periods through emergency governance pathways.
Second, financial infrastructure becomes an explicit theatre of strategic competition. Clearing, custody, and settlement utilities become targets of legal and retaliatory measures, pulling system operators into security and foreign-policy dynamics.
Third, the boundary between sanctions and compensation narrows through institutional design. As claims mechanisms mature, pressure grows to convert immobilised assets into durable financing or compensation outcomes, increasing the strategic stakes of legal theory, enforcement politics, and alliance cohesion.
Scenarios, 2026–2029
Four trajectories appear plausible over the 2026–2029 horizon:
Stabilized leverage and protected infrastructure. Europe sustains open-ended immobilisation, shields market utilities through legal and political measures, and operationalises proceeds-linked financing that holds under court challenges and retaliation attempts. The Claims Commission matures into a credible adjudication and allocation pathway, strengthening accountability while supporting Ukraine’s fiscal continuity.
Litigation drag and slow institutional erosion. Russia’s legal campaign becomes a chronic friction engine. Enforcement attempts in third jurisdictions, reputational pressure, compliance costs, and operator anxiety create persistent drag on Europe’s ability to use immobilised assets as a clean strategic lever. Financing continues, yet at rising political cost and with higher operational burdens for core market infrastructure.
Escalatory retaliation and accelerated fragmentation. Legal escalation is paired with broader retaliatory tactics and intensified hybrid pressure. Europe doubles down on immobilisation while defensive measures deepen. The wider consequence is faster fragmentation: more states diversify reserve custody and settlement pathways away from European nodes to reduce exposure to future immobilisation risk.
Wildcard: precedent cascade beyond the Ukraine theatre. A separate geopolitical crisis triggers imitation by other blocs. Immobilisation of sovereign reserves becomes more widely used, and reserve safety becomes explicitly contingent on alignment and jurisdiction. Central banks accelerate diversification of custody geographies and seek alternatives that reduce exposure to coercive finance.
Closing Perspective
Europe’s choice is a wager on endurance: that strategic continuity and deterrence value outweigh legal and reputational exposure. Russia’s response is a wager on cost escalation: that legal pressure and retaliation raise the price of endurance until cohesion weakens.
The decisive variable is operational resilience. Europe is attempting to use financial infrastructure as leverage while preserving its credibility as neutral market plumbing. The trajectory will be shaped by the durability of EU political cohesion, the evolution of third-jurisdiction enforcement attempts, the institutional momentum of the Claims Commission, and the sequencing of Ukraine financing needs into 2026.
About Our Guest Contributor
Ivan Savov is Chairman of the European Risk Policy Institute (ERPI), working at the intersection of global risk governance, climate resilience, and AI-assisted strategic decision-making.
📍Sofia, Bulgaria
Sources
Reuters, EU agrees to indefinitely freeze Russian assets…, 12 December 2025.
Reuters, Russia’s central bank seeks $230 billion in damages from Euroclear…, 15 December 2025.
Reuters, Europe to launch international commission for Ukraine war damages, 16 December 2025.
Council of Europe, International Claims Commission is launched, 16 December 2025.
Euronews, EU dismisses Russia’s lawsuit against Euroclear…, 12 December 2025.
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