Trump Administration Joins EU in Russian Frozen Asset Madness

The level of derangement among far too many of our putative betters has reached such a fever pitch that mere narcissism and grandiosity seem inadequate as explanations. The latest example comes via the Wall Street Journal, in an exclusive account as to how the Trump Administration intends to avail itself of Russian central bank frozen assets, with the fig leaf that of course Russia would go along to curry favor with Trump and because investing in a busted up country is clearly a fabulous commercial opportunity. Let us not forget that the US tried a more adult version of this plan and got nowhere. It hired BlackRock as an adviser to flog a Ukraine reconstruction fund,¹ back the days when the tale that Ukraine would win the war seems much more plausible, and got nowhere.

The interesting angle here is that the US has pitched this goofy idea to EU officials, since they control the bulk of the frozen Russian central bank assets which has been reported most recently as €140 billion or more worth in Euroclear.²

Mind you, the Europeans, in the persons of European Commission chief Ursula von der Leyen, and her allies in planned Russian asset heist like Emmanuel Macron, Kier Starmer, Frederich Merz, and Kaja Kallas, are as deluded, but less flamboyantly so, since they are having to labor mightily to paint a veneer of legality over a theft that puts the budgets of EU member states. Part of von der Leyen’s scheme is grandly to apportion liability to each and every member state that is made to participate in this heist, even if it is fiercely opposed.

But back to the more obviously bonkers Trump plan. The Journal account suggests that the Trump plan to use Russia frozen assets in a US managed “fund” for Ukraine reconstruction, which was part of leaked 28 points plan, has set off the frenzy in European capitals to grab them pronto, before the US and Russia can come to an agreement….as if that were at all likely. From U.S. Blueprint to Rewire Economies of Russia, Ukraine Sets Off Clash With Europe:

The Trump administration in recent weeks has handed its European counterparts a series of documents, each a single page, laying out its vision for the reconstruction of Ukraine and the return of Russia to the global economy…

The U.S. blueprint has been spelled out in appendices to current peace proposals that aren’t public but were described to The Wall Street Journal by U.S. and European officials. The documents detail plans for U.S. financial firms and other businesses to tap roughly $200 billion of frozen Russian assets for projects in Ukraine—including a massive new data center to be powered by a nuclear plant currently occupied by Russian troops.

Let’s stop here. The Zaporzhizhia nuclear power plant is not merely “currently occupied”. It is in one of the four oblasts that voted to join Russia and Russia, per its constitution, has made part of Russia. There is simply no way that the West is going to get use of it on anything other than arms-length commercial terms.

Any discussion of power or reconstruction of Ukraine generally ignore the fact that no one other than Russia can execute it. Recall that Russia has already done considerable damage to not just Ukraine electricity transmission but increasing to generation as well. Ukraine’s grid runs on old Soviet standards, as does Russia now. Western businesses simply are not going to set up production capacity to make want amounts to a very large special order of the needed repair and replacement kit. Russian firms are in that business and could be persuaded or induced to gear up for the needed big but time-limited output surge.

And of course there is the overriding highly optimistic assumption, that there will be an economically and politically independent Ukraine after the war. Ukraine and the EU are laboring mightily to make sure that does not happen. Their continued intransigence and belligerence have made the case to a highly risk-averse Putin that Russia will have to dictate outcomes on the battlefield. So the only question is how much Russia decides it has to add to Russia versus make into a rump Ukraine overseen by a friendly regime.

Back to the Journal:

Another appendix offers America’s broad-strokes vision for bringing Russia’s economy in from the cold, with U.S. companies investing in strategic sectors from rare-earth extraction to drilling for oil in the Arctic, and helping to restore Russian energy flows to Western Europe and the rest of the world.

This is the worst sort of arrogant paternalism, as if Russia still needed the West.

The quiet scandal in global economics:

From 2008 to 2025, Russia’s real GDP per capita grew faster than Germany, the UK, and France despite sanctions, SWIFT bans, export controls, frozen assets and a full-scale geopolitical confrontation. pic.twitter.com/0C7ijjrCcc

— . (@Lucid_Watcher) December 5, 2025

But not to worry, the Journal reassures us that Russia really is hurting:

A new assessment by a Western intelligence agency, reviewed by the Journal, said that Russia has technically been in recession for six months and that the challenges of running its war economy while trying to control prices are presenting a systemic risk to its banking sector.

One has to assume the Russian negotiators were also informed about this scheme (a version of this idea, but perhaps less detailed, was to be respectfully receptive when the US presented this asset, erm, usage plan, as opposed to bursting out laughing, or alternatively getting angry over being presumed to be total chumps.

Returning to the Journal:

Some European officials who have seen the documents said they weren’t sure whether to take some of the U.S. proposals seriously. One official compared them to President Trump’s vision of building a Riviera-style development in Gaza. Another, referring to the proposed U.S.-Russia energy deals, said it was an economic version of the 1945 conference where World War II victors divvied up Europe. “It’s like Yalta,” he said.

Readers are encouraged to opine, but given the early similarly high-handed-while-also-barmy Ukraine “raw earths” scheme that the US browbeat Ukraine into accepting after some negotiation, yours truly thinks this is part of Team Trump following the Red Queen practice of working to believe impossible things. Such as:

U.S. officials involved in the negotiations say Europe’s approach would quickly deplete the frozen funds. Washington, on the other hand, would tap Wall Street executives and private-equity billionaires to invest the money and expand the amount available to invest. One official involved in the talks said the pot could grow to $800 billion under American management. “Our sensibility is that we really understand financial growth,” the official said.

Now to the European part. Ursula von der Leyen is attempting to ram through legislation that would allow the Commission to seize the frozen assets in Euroclear pursuant to emergency powers. Belgium has objected vociferously since it would be on the hook if Euroclear were sued successfully. The ECB has refused to provide a backstop:

I asked ECB President Lagarde about the potential impact on financial stability of using Russian frozen assets held at Euroclear (140 billion). The ECB has (rightly) indicated that a guarantee would be a breach of the Treaty. Other options urgently needed for Ukraine👇 @wbeke pic.twitter.com/ih9j89n5GV

— Dirk Gotink (@DirkGotink) December 3, 2025

Since Euroclear has also said in no uncertain terms that it thinks the asset heist, prettied up as trying to use the assets as collateral for loans, is illegal, I am not sure how it can be compelled to turn over the funds, given the general rule of “possession is 9/10 of the law” and the near-certainty that Euroclear and Belgium would seek an injunction too.

❗️Belgian Prime Minister Bart De Wever called the European Commission's proposal to use frozen Russian assets to provide Ukraine with a reparations loan “theft,” reports VRT NWS.

“There are certainly better solutions than stealing the Russian central bank’s money. This is a… pic.twitter.com/KJR0mQWD5D

— 🪖MilitaryNewsUA🇺🇦 (@front_ukrainian) December 10, 2025

Aside from Russia suing Euroclear in a non-EU court where Euroclear operates (readers can opine, but I see Singapore courts provide for discovery), Russia can also take matters into its own hands:

One of the unintended consequences of the EU's batshit crazy plan of ̶s̶t̶e̶a̶l̶i̶n̶g̶ appropriating and repurposing Russia's frozen assets is the fact that Euroclear, a body responsible for processing equities, bonds, derivatives, and investment fund transfers, still holds… pic.twitter.com/6RHLDTpjEk

— Nina 🐙 Byzantina (@NinaByzantina) December 10, 2025

But weirdly (or perhaps following its friends at the Commission) the Financial Times in a story yesterday tried to make Hungary’s Viktor Orban, regularly demonized for being too friendly with Russia, into the bad guy. From a Wednesday story:

EU countries are to fast-track a decision to indefinitely immobilise up to €210bn in Russian sovereign assets, in an attempt to bypass Hungarian Prime Minister Viktor Orbán even before Europe’s leaders meet for a summit next week.

The hurried effort to pass the legislation — which invokes emergency powers to override national vetoes on the extension of sanctions — aims to protect Brussels’ leverage in US-led peace talks over the war in Ukraine, according to officials familiar with the plans.

Diplomats handling the legislation see advantage in moving swiftly in coming days to detach the contentious question of immobilising assets from the debate on raising loans for Kyiv backed by the frozen Russian funds. That funding question will be left to EU leaders next week.

The move to vote within the coming week, overriding the principle of unanimity on sanctions decisions, risks enraging Hungary and other countries that oppose the measure. Past instances of EU countries outvoting other member states on critical issues — such as Poland and Hungary on migration policy — have caused bad blood between capitals for years.

The European Commission last week proposed using €210bn of Russia’s foreign assets immobilised under sanctions in the EU to fund a loan to Kyiv, initially for €90bn that would be disbursed in the next two years. 

For the loan scheme to work, the underlying assets need to be immobilised indefinitely, rather than for six-month periods that can only be renewed with unanimous agreement of all EU27 countries…

To bypass the risk of the sanctions being lifted, the commission has proposed using emergency powers reserved for dealing with economic crises to indefinitely impose the sanctions on the assets. Enacted under Article 122 of the EU’s treaties, it can be passed with just a majority of EU countries, circumventing potential vetoes. 

Mind you, there is no crisis. There will be a tsunami of litigation if the Commission and its allies manage to get this scheme implemented. And there would be a crisis due to their malfeasance if the plaintiffs were to prevail. So the plan is use emergency powers to contend with the emergency knowingly produced by entirely voluntary action decried by those best in the know (Euroclear) as illegal.

As an aside, one has to think that a and perhaps the reason that Ursula von der Leyen has pursued this scheme so manically is that it is far and away her best opportunity to greatly expand the Commission’s powers. She’s been on a massive land grab ever since she took office.

This morning’s Politico European newsletter seemed less bullish than the prior day pink paper account, and also corrected the barmy idea that Orban was the big baddie:

GROUNDHOG DAY
ENVOYS DISCUSS ASSETS SUPERFREEZE: EU ambassadors will today weigh up whether to hand the Commission emergency powers to keep Russia’s state assets frozen indefinitely. Envoys will examine updated legal texts after Wednesday’s inconclusive discussion, three EU diplomats told POLITICO’s Gregorio Sorgi.

What’s that: The mechanism is a cornerstone of the Commission’s plan to mobilize €210 billion in frozen Russian assets for Ukraine — most of which are held by the Belgian-based Euroclear. It would overhaul the current system that compels EU countries to unanimously reauthorize the sanctions every six months.

That means Kremlin-friendly countries such as Hungary and Slovakia would lose the power to release the sanctioned money with a simple no vote, leaving EU capitals on the hook to repay the loan to Russia.

The light at the end of the tunnel: The diplomats said late Wednesday that the proposal could be “stripped down” in a bid to win Belgium’s support and adopt the plan by the end of the week. Hopefully.

Yes, it’s still all about Belgium: PM Bart De Wever is holding out over concerns that Belgium could be financially exposed if the money needs to be repaid and has now asked for more safety nets. In an interview with VRT NWS Wednesday, De Wever even refused to rule out legal action if the EU moves ahead with seizing the assets…

More stick than carrot: Europe’s strategy to sway Belgium may be to warn the kingdom that it could be treated like Hungary if it doesn’t come on board — with its diplomats, ministers and officials losing their voice around the EU table, reports Zoya Sheftalovich.

The Politico entry contains this amusing section:

“No jurisdiction”: A legal memo circulated among diplomats Wednesday by law firm Covington & Burling rejects Belgium’s argument that it would face major legal retaliation from Russia.

The four-page document says the risk of litigation is “minimal,” insisting Russia wouldn’t be able to challenge an EU reparations loan in the International Criminal Court or “any comparable international adjudicative body.”

Legally-sophisticated readers know that if you look long enough, you can find a lawyer who will bless pretty much anything.³ And I don’t think of Covington as premier firm in financial or international litigation. I would have thought one of the top New York “white shoe” or London firms would be the go-tos on this topic. A ranking by Chambers of US firms alone for Disputes (International & Cross-Border) | Global of US firms confirms this notion, putting Covington well down on the list. I hope our expert commentariat will pipe up with their views.

Even though von der Leyen and her fellow conspirators are laboring mightily to get her long-sought “seize not freeze” scheme across the line, note the Politico signposting: Groundhog Day. They are of the view this will be another episode of motion playing at progress.

But even then, simply keeping the matter in play bolsters Zelensky domestically, as in continuing to keep alive the fantasy that there will be more money and weapons for Ukraine. European leaders are as committed as every to fighting to the last Ukrainian.

_____

¹ BlackRock never committed to invest in this scheme, contrary to some claims.

² The total amount reported has varied, in part because the EU has been stealing the interest, and some accounts may include the assets of sanctioned Russian entities and individuals along with the central bank holdings. The Financial Times on Wednesday reported that Euroclear held €185 billion of Russian frozen assets.

³ For instance, recall Linklaters blessing Lehman’s use of Repo 105 to engage in accounting fraud, which pretty much every legally responsible adult derided when it became public.