As the war in Ukraine continues to rage, EU leaders continue to look for ways to finance arms support to Ukraine. The idea to seize the Russian assets held by Belgian custodian Euroclear has resurfaced, but the same arguments against confiscation are coming back as well.
At least there is one thing which is clear: arms support to Ukraine has been a lot more helpful for the beleaguered country than the whole series of sanctions deployed against Russia. Even if the U.S. has scaled down its support for Ukraine, it is still providing vital intel for Ukraine which has enabled it to blast targets deep into Russia.
Ironically, US President Trump is annoyed by Ukraine’s success here, and has been pressuring the country to stop doing this. Separately, he also recently agreed a deal with Russia to import millions of tons of Russian diesel over time. Also, he has waived nearly all substantive sanctions, tariffs, and restrictions included in new bipartisan legislation – the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 – aimed at pressuring Russia to end its war against Ukraine.
Then the legislation still enables Trump to impose duties of up to 100% on US imports from countries that make new purchases of Russian crude oil or natural gas. While European countries generally consider Trump way too soft on Putin, they may be hit here, as European countries have been buying Russian LNG at record levels, especially since the Iran war disrupted alternative supplies. The EU thereby even carved out a temporary exemption allowing certain transfers of Russian LNG to third countries under contracts concluded before February 2022. In fact, the Graham bill may lead to calls to activate the EU’s so-called “Anti-Coercion Instrument”, which has been agreed in response to China bullying Lithuania over its Taiwan policy back in 2022.
Ineffective sanctions
Apart from the rather confusing nature of the Russia sanctions, there is also the inevitable conclusion that they do not seem to deliver much to help Ukraine.
Last year, the US has threatened to burn India with higher customs tariffs, to pressure the country to stop doing business with Russia. Peter Navarro, trade adviser to the White House, then openly stated that India’s purchases of Russian crude oil are financing Moscow’s war in Ukraine and must stop. He wrote in an opinion piece in the Financial Times: “India acts as a global clearinghouse for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs.”
Those in favour of sanctions will of course say that we need more patience. Russia’s budget deficit has now hit 5.8 trillion rubles ($72 billion), almost 50% higher than last year’s figure and above the already revised target of 4.8 trillion rubles. The Russian 2027-2029 state budget therefore foresees a range of tax hikes.
Chris Weafer, CEO of consultancy Macro-Advisory Ltd., thinks that Russia has enough financing available to cover the deficit in 2027 and probably 2028, but he adds: “that is at the expense of raising taxes, of increasing costs for households as well as business. (…) And it means that there is much less money available for normal economic development or infrastructure. Basically, the budget is now moving to a phase where it is primarily funding the military and the military operation.”
Also the Kyiv School of Economics thinks that Russia’s finances are stable for the moment, but “the room for maneuver is limited: an adverse shock such as a drop in global energy prices or an erosion of confidence in the financial system could quickly destabilize the fragile equilibrium.”
The EU has now implemented 22 packages of sanctions. At some point, one should dare to raise the question when they will actually affect Russia’s war waging capacity, especially as the cost for the EU economy has been more than evident.
Looking back in history, it would not be the first time to see sanctions not achieving their desired effect. In her 2022 book entitled ‘Backfire’, French policy analyst Agathe Demarais takes a closer look at sanctions as a policy instrument. She provides an overview of the unintended side effects of modern – American – sanctions and export controls, describing the innovative techniques used by regimes to circumvent such sanctions.
Demarais thereby points out that there is indeed economic damage in Russia, but the question is whether this will ultimately have any impact on Putin’s war machine. In September 2024, she wrote that the West’s 2022 plan to cause a balance of payments crisis in Russia by freezing the country’s central bank reserves had “failed” and that this “was clear … after just a few weeks”:
“Moscow’s continued sales of oil and gas meant that the country’s current account remained firmly in surplus, supporting the central bank’s efforts to replenish its coffers with (unfrozen) reserve assets. (…) The lesson here is that it is almost impossible to engineer a balance-of-payments crisis in a country that runs a huge current account surplus.”
Two years later, despite the Iran war and Ukraine damaging Russian energy production infrastructure, not much seems to have changed. Admittedly, things may turn out differently in the end, but if sanctions have failed to bring Cuba, Venezuela, Libya or Saddam Hussein’s Iraq to heel, it would be historically unique for them to succeed with the Putin regime.
‘Magnitsky’ – style sanctions?
A specific kind of sanctions are so-called ‘Magnitsky’ sanctions, which are being deployed against specific individuals involved in serious human rights violations or corruption. They involve imposing visa bans and freezing the assets of individuals.
Given the enormous migratory pressure on the West, it should be obvious that the first to be denied entry to Western countries should be key figures from regimes responsible for the large-scale wave of emigration to the free West.
The sanctions against Russia are so lax that even Putin's cronies are able to buy western jets and expand their luxury lifestyles.
My report via @WSJ https://t.co/dVLFZ7w4mL— Bojan Pancevski (@bopanc) June 6, 2026
The latest EU sanction package, decided in October 2026, added 1,569 individuals and entities, bringing the total to nearly 4,600 designations, with a major focus on Russia’s military-industrial supply chain, ballistic missile production, and executives.
Notably, ahead of the decision, the French government lobbied EU countries to lift sanctions on Uzbek-Russian oligarch Alisher Usmanov as part of a prisoner release with Azerbaijan.
Apart from the double standards, there is the issue that such sanctions on specific persons do not not seem to be very successful either. A specific problem is that it is not always legally clear who is controlling certain assets, and the correct procedures are sometimes flouted. In 2024, a Russian oligarch won a court case against the EU on this basis.
Rule of law concerns
A new documentary, called “Sanctioned at Home”, features miscarriages of justice as a result of administrative decisions to impose sanctions on people. It documents how the UK’s Sanctions and Anti-Money Laundering Act turned sanction designations into the default response, faster and cheaper than diplomacy or force, and applied at a scale few anticipated.
It thereby warns about the opaque process that freezes assets and alters civil status by administrative fiat, suggesting it threatens to undo long-standing expectations about the burden of proof and judicial supervision.
Roger Gherson, a senior lawyer specialised in sanctions law, comments in the documentary that “The sanctions system reshapes lives and businesses overnight. It is undoing hundreds of years of legal development both in terms of the burden of proof and judicial supervision. It’s imperative that people understand what is happening here.”
Euroclear
Other methods of helping Ukraine, like freezing Russian assets, also raise questions. It could challenge the West’s status as a safe haven for securing property, and make wealthy individuals in the Arab world or Asia, for example, question whether it is a good idea to have their assets protected in Western jurisdictions.
The Belgian government therefore last year strongly objected to the EU Commission plan to seize Russian assets held at Belgian custodian Euroclear, stressing that it can only agree if there would be “legally binding, unconditional, irrevocable, on-demand, joint and several guarantees” from all other EU member states to cover the potential fallout, like arbitration costs, interests, investment opportunity loss and even the “quantification of financial impact to the Central Bank of Russia’s credit”. In a scathing letter to European Commission President Ursula von der Leyen, Belgian Prime Minister Bart De Wever, blasted the proposed reparations loan as “fundamentally wrong” and riddled with legal and financial pitfalls.
In response to reports by lawyers dismissing the risks that Belgium could be sued on the basis of the BIT it closed with the USSR in 1989, Belgian Finance Law Professor Veerle Colaert points out that "not only Belgium, but also Euroclear needs guarantees, and the risks for…
— Pieter Cleppe (@pietercleppe) December 17, 2025
All of that, just to get Ukraine at best two years of extra financing, and to avoid paying to help Ukraine directly, which may become unavoidable anyway afterwards. The European Central Bank has refused to backstop the EU Commission’s plan on the basis of the ban on monetary financing. Another argument against is that the West would no longer be able to use Euroclear assets as a card during the negotiations with Russia, when at some point talks about a settlement begin.
At the end of last year, Diplomats from other EU member states have stated that that they cannot accept Belgium’s demands because it would put their country’s financial viability at the whim of a court ruling, potentially exposing them to billions of euros of repayments years after the war in Ukraine ends.
That does not even cover the challenge that also the United States have shown an interest in the Euroclear billions. Do European NATO countries really think they could ever get away with quickly sneaking the cash before their American security provider can? Not that it would become a good idea if Trump would force through effective confiscation of these assets. There is no known precedent. Frozen Iraqi assets were used to compensate the victims of the Iraq’s 1990 invasion of Kuwait and Iran’s 1979 seizure of the US Embassy in Tehran, but these were legally solid as they were part of post-conflict peace deals – a UN resolution and a diplomatic deal respectively.
The truth is that if European countries want to help Ukraine – and apart from the moral case of helping a country suffering an unprovoked attack, there is a case of self-defence to be made here – they simply need to pay for it. Thereby, they must be careful not to end up in a direct conflict with Russia. Despite the ongoing cases of Russian hybrid warfare in Europe, that thankfully still is the case.
