Europe keeps circling the same question, as if it were a delicate philosophical puzzle: can the EU touch Russia’s central bank reserves without violating immunity? Europe keeps acting as if the only thing at stake is doctrinal elegance, plus a vague fear of “retaliation”.
Russia has already answered the retaliation question. Russia has already done the damage, openly, methodically, and with the kind of administrative speed that makes European summit diplomacy look like theatre.
The asymmetry is glaring, and it is starting to look voluntary
The EU has immobilised around €210 billion of Russian sovereign assets, with the bulk concentrated at Euroclear in Belgium.
The EU then spent years downgrading its own ambition, from serious confiscation talk to increasingly timid financial engineering, and, most recently, to a large Ukraine loan that was not secured against those assets because consensus collapsed again.
Meanwhile Russia has treated European property rights inside Russia as a negotiable inconvenience.
Russia has used presidential decrees to place foreign assets under “temporary management”, which in practice meant loss of control, loss of governance, and a forced transfer of economic reality even when legal title was left in limbo. The July 2023 decrees covering Danone’s Russian subsidiary and Carlsberg’s Baltika stake are the clean example, and Carlsberg itself stated that it no longer retained control over management or operations after the decree.
So Europe worries that touching Russian reserves could trigger Russian countermeasures against European assets. Europe worries about a thing that has already happened.
Exit from Russia is not a market, it is a levy
Russia has also turned “exit” into a rule-bound extraction mechanism. Russia has imposed mandatory valuation discounts and “voluntary contributions” to the state budget as a condition for selling and leaving. The legal monitoring of Russia’s measures reports a mandatory discount increased from 50% to 60% and an exit contribution raised from 15% to 35%, paid in instalments.
This is not normal commercial friction. This is a fiscal pipeline dressed up as regulation.
And this is where the EU’s current debate becomes, honestly, hard to respect: Europe treats Russian assets in Europe as sacred, while Russia treats European assets in Russia as raw material.
The right move is “compensation against assets”, not metaphysical confiscation
Europe does not need to pretend that confiscation is the only tool. Europe does not need to claim a moral epiphany. Europe needs a structure that matches reality.
Europe should say this, clearly:
From now on, verified losses suffered by EU companies as a result of Russian expropriation, forced transfer, or coercive exit conditions will be compensated using immobilised Russian sovereign assets held in the EU.
This is compensation, not necessarily confiscation.
This is not just semantics. This is legal and political engineering, and Europe is very good at engineering when it stops being shy.
What “compensation” would look like, in practice
1) Create a European Corporate Loss Compensation Facility.
The EU should create a facility that pays eligible EU companies (or their insurers and lenders by subrogation) for documented losses caused by Russian measures that deprive them of control, force discounted sales, or impose coercive exit levies.
The facility should be funded in layers:
- First layer (immediate): revenues and windfall profits generated by immobilised Russian sovereign assets already sitting inside the EU financial infrastructure (the EU has already accepted the principle that proceeds linked to immobilised assets can be channelled).
- Second layer (credible backstop): a standing right to draw on the principal of immobilised assets if Russia does not satisfy an eventual reparations framework.
This second layer is precisely what the EU already hints at whenever it repeats that the assets remain frozen “until Russia pays”.
The EU just refuses to operationalise the sentence.
2) Treat the facility as a set-off mechanism linked to reparations, not as a wild grab.
Europe can frame this as set-off and security within a broader reparations logic: Europe pays now, Europe acquires the paid claims, and Europe later offsets those claims against what would otherwise be returned to Russia.
This is why “compensation” is cleaner than screaming “confiscation” at every microphone. Compensation builds a ledger. Compensation turns corporate losses into quantified claims, and quantification is where legal arguments start to behave.
3) Plug the facility into the emerging international claims architecture.
Europe has just signed a Council of Europe convention establishing an International Claims Commission for Ukraine, building on the operational Register of Damage (with tens of thousands of claims already recorded and a far larger pipeline reported).
This architecture is not a slogan. This architecture is the embryo of a system.
The EU should align corporate compensation with that system: the facility becomes the European interface for corporate losses connected to Russian measures, and the EU becomes a disciplined claimant rather than a nervous bystander.
Why this beats the current European posture
Because it reverses the most humiliating feature of the debate: the idea that “immunity” is an absolute shield for Russia’s reserves, while European property rights in Russia are treated as collateral damage.
Because it internalises what Europe already knows but keeps whispering: Russia litigates anyway, Russia intimidates anyway, Russia escalates anyway. Russia’s central bank has now pursued massive litigation against Euroclear in Moscow, and rating agencies have already flagged the legal and liquidity risks around EU plans even when those plans stop short of confiscation.
Because it tells European companies something that matters: Europe will not socialise the costs of Russia’s coercion onto private balance sheets while preserving Russian state wealth as if reciprocity still existed.
The real choice Europe has been avoiding
Europe keeps presenting itself with a false binary: either Europe confiscates, or Europe does nothing. Europe hides behind that binary because the binary is comfortable.
Europe has a third option, and it is the only serious one: compensate first, litigate later, and treat frozen Russian assets as the financial security for that compensation.
If Europe refuses even this, then the doctrine it is really defending is not sovereign immunity. The doctrine it is really defending is European self-deterrence.
P.S. If someone asks, “Is there any judicial and final decision condemning Russia to pay damages?”, the short answer is: there is not yet a definitive decision ordering Russia to pay damages, but international responsibility has already arisen.
The invasion of Ukraine constitutes a serious violation of international law and of Article 2(4) of the UN Charter, which generates duties of cessation and reparation under the basic rules of state responsibility. The UN and the Council of Europe have already initiated mechanisms directed toward future claims and liquidation of losses, including the Register of Damage for Ukraine.
My proposal sits in this intermediate space: it does not pre-empt a formal judgment, but it recognises that the injury has already occurred and that the EU can structure protection and compensation mechanisms for its own actors while a definitive decision is still pending.