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For decades, the European Union was described as an economic superpower but a
geopolitical lightweight. Its strength lay in markets, regulation, and trade—not in
hard power or strategic coercion. The so-called Brussels Effect allowed the EU to
shape global standards through economic gravity rather than military force. But
Russia’s full-scale invasion of Ukraine exposed the limits of that model. Economic
power without geopolitical resolve proved dangerously insufficient.
Now, Brussels is changing course. By moving to indefinitely freeze Russian
sovereign assets, the EU has taken one of the most consequential financial
decisions in its history—one that could reshape Europe’s economic security,
redefine sanctions policy, and influence the future of the international order.
From Economic Giant to Strategic Actor
Europe’s vulnerability became painfully clear after 2022. Dependence on Russian
energy, reliance on fragile global supply chains, and underinvestment in defense
exposed how geopolitics and economics are inseparable. The idea that markets
alone could ensure security collapsed under the pressure of war.
This reality explains the growing prominence of terms like “geoeconomics,”
“economic security,” and “strategic autonomy.” In today’s world, economic stability
is no longer insulated from geopolitical conflict. Supply chains can be weaponized.
Financial systems can be pressured. Sanctions can reshape entire economies.
Recognizing this shift, the European Commission recently updated its Economic
Security Strategy, originally adopted two years earlier. While the initial version
focused on reducing dependencies on Russia and China, the updated framework
reflects a more urgent concern: the fragility of Western unity itself, especially amid
political uncertainty in the United States.
Why the Old System Failed
Europe’s current predicament is not due to a lack of foresight. The EU’s Joint
Research Centre warned as early as 2011 about vulnerabilities in critical raw
materials. Analysts repeatedly cautioned against excessive dependence on
Russian gas, even as projects like Nord Stream 2 moved forward.
The same pattern appeared in industrial policy. European manufacturing—
particularly the automotive sector—remained reliant on single suppliers and just-
in-time logistics. When supply shocks hit, there were no buffers. No stockpiles. No
redundancy.
In short, the risks were identified, but political will was missing.
That gap between analysis and action has long defined EU policymaking. As critics
often note, Europe excels at strategy papers—but struggles with execution.
A Rare Show of Resolve: Russian Assets Frozen Indefinitely
That is why the EU’s latest move stands out.
On December 12, 2025, the European Union decided to keep approximately €210
billion ($246 billion) in Russian central bank assets frozen indefinitely. This was not
a routine sanctions extension. It was a structural change.
Previously, the asset freeze depended on six-month unanimous renewals, giving
any single member state—most notably Hungary—the ability to hold the policy
hostage. That vulnerability is now gone.
Using Article 122 of the EU Treaty, an emergency provision designed for economic
crises, Brussels removed the unanimity requirement. The immobilization of
Russian sovereign assets is now treated as an extraordinary measure justified by
extraordinary circumstances.
This is a fundamental shift—from temporary sanctions to long-term strategic
leverage.
Why Article 122 Matters
Article 122 grants the EU broad powers during economic emergencies. It was
controversially used during the Covid-19 pandemic. Its application here signals
something important: financial warfare is now considered a core element of
European security policy.
By invoking Article 122, the EU has demonstrated that it can act decisively when
faced with systemic threats. Adversaries will take note. So will allies.
Most importantly, the decision neutralizes one of the Kremlin’s most reliable
pressure points: exploiting internal EU divisions to weaken sanctions from within.
Ukraine, Funding, and the Reparations Debate
The immediate implication of the asset freeze is Ukraine.
With warnings that Kyiv’s funding could run out by April 2026, European leaders
are urgently exploring ways to ensure long-term financial support. The frozen
Russian assets are central to this discussion.
The prevailing idea is not outright confiscation—at least not yet—but using the
assets as collateral for large-scale loans to Ukraine. Under this structure, Russia
would technically remain the legal owner, while the funds generate financing for
Ukraine’s defense, governance, and reconstruction.
This approach aims to balance three priorities:
Sustaining Ukraine’s war effort
Maintaining pressure on Russia
Minimizing legal and financial risk
The Euroclear Legal Minefield
Most of the immobilized assets are held at Euroclear, the Brussels-based central
securities depository. This places Belgium at the center of the storm.
Russia has already filed lawsuits against Euroclear in Moscow courts, and the
company faces over 100 legal claims linked to the frozen assets. Belgian
authorities worry about retaliation, asset seizures, and reputational damage to
Europe’s financial infrastructure.
These concerns are real. Immobilization is legally safer than confiscation. Turning
frozen assets into usable financing—without triggering cascading lawsuits—
requires careful legal engineering.
European officials argue that risk can be managed. But there is no illusion that this
is a low-stakes move. It is a calculated gamble.
Washington’s Diverging Path
Europe’s strategy increasingly diverges from Washington’s.
Reported elements of Donald Trump’s peace framework would have effectively
ended Europe’s control over Russian frozen assets, returning much of the money to
Russia while redirecting a portion into U.S.-controlled investment vehicles for
Ukraine’s reconstruction.
For European leaders, this was unacceptable.
Leverage matters. Past agreements with Russia lacked enforcement. Europe has
learned—often the hard way—that peace without deterrence is temporary.
Trump’s approach reinforced a growing concern in European capitals: U.S.
commitments are increasingly conditional and transactional.
Credibility, Aid, and Alliance Politics
That concern is amplified by disputes over Ukraine aid figures.
Independent tracking by the Kiel Institute shows that by mid-2025:
Europe delivered ~$195 billion in aid to Ukraine
The U.S. delivered ~$134 billion
These figures sharply contradict claims that the U.S. provided $350 billion. When
numbers are exaggerated, trust erodes. And in alliance politics, credibility is
currency.
As Europe is asked to shoulder more responsibility for deterrence, uncertainty
about U.S. reliability becomes a strategic vulnerability.
A Fragile Financial Backbone
Behind the scenes lies another uncomfortable reality: the global financial system
underpinning the Western alliance is under strain.
U.S. national debt has surpassed $38 trillion, while foreign holdings of U.S.
Treasuries exceed $9 trillion. European countries—alongside Japan—are deeply
embedded in this system.
No one wants to weaponize sovereign debt. Doing so would hurt holders as much
as issuers. But politics has entered the equation. Financial interdependence no
longer guarantees neutrality.
Europe understands this—and is quietly adjusting.
Why This Decision Matters Beyond Ukraine
This is not just about funding a war.
It is about whether aggression pays.
The post-1945 international system rests on a simple principle: borders are not
changed by force. If that principle collapses in Europe, it weakens everywhere—
from Eastern Europe to the Indo-Pacific.
That is why allies like Canada, Japan, and the Five Eyes partners are watching
closely. The handling of Russian assets sets a precedent.
If the West blinks, the world becomes more transactional—and more imperial.
Europe Is No Longer a Herbivore
By freezing Russian assets indefinitely, the EU has shown it is capable of strategic
action when stakes are high.
This move alone does not eliminate Europe’s vulnerabilities. But it signals a change
in mindset—from reactive consensus-seeking to proactive power-wielding.
Brussels is no longer just regulating markets. It is shaping outcomes.
The legal battles will continue. Russia will contest the decision. Belgium will remain
cautious. The framework is delicate.
But the message is unmistakable: Europe has turned frozen Russian assets from a
recurring weakness into a strategic instrument.
And for the first time in a long while, the EU is not just talking—it is producing.
