Born in 1967, former Governor of the National Bank of Serbia (2010-2012), Dejan Šoškić is today Full Professor at the Faculty of Economics (EFB) of the University of Belgrade and Member of the Serbian Academy of Economic Sciences.
Guillaume de Sardes: When, in February 2022, Russia entered Ukrainian territory, the European Union enacted a series of sanctions, including the freezing of the Russian Central Bank’s assets held by Euroclear. The exact amount is not known, but it is estimated at around 180 billion euros. Before going any further, could you explain what Euroclear is, who its shareholders are, and what role it plays in the international financial system?
Dejan Šoškić: Euroclear is a holding company serving as an International Central Securities Depositary (CSD) and its main job is to provide clearing and settlement in securities denominated mainly in euros. Within its group, Euroclear has a Euroclear bank and both Euroclear and Euroclear bank have branches abroad.
Shareholders of Euroclear group are quite diverse and dispersed globally, and mainly institutional. However, French and Belgian shareholders are among the largest. Euroclear plays a pivotal and vital role in trade, clearing and settlement of euro denominated securitieis globally. Central banks managing their FX reserves, especially the part that is denominated in euros, are regular and important clients of Euroclear. Euroclear prouds itself with security of client accounts and safekeeping of their investments.
Faced with the persistence of the conflict and the severe financial difficulties now facing the Ukrainian state, the idea of using frozen Russian funds to arm and finance Ukraine is regularly put forward. The Vice-President of the European Commission, Kaja Kallas, posted on her X account on 7 November2025: “We must find a way to use Russia’s frozen assets entirely.” But this ambition encounters a major obstacle: under the customary practice of states confirmed by the United Nations Convention on Jurisdictional Immunities of States and Their Property (2004), as well as by the case law of the International Court of Justice, the assets of a foreign central bank enjoy an almost absolute immunity from execution. Seizing the reserves of the Russian Central Bank would create a historical precedent and could immediately be challenged before European and international courts. To circumvent this difficulty, the EU has already introduced a mechanism using only the interest generated by the frozen assets, which made it possible to transfer 1.5 billion euros to Ukraine in July 2024. What do you think of this mechanism? Does it seem to you to comply with international law? Can the interest generated truly be distinguished from the principal?
In my opinion, it is not permissible to disentangle the ownership of assets from the income generated on the same assets if such a possibility has not been stipulated in an original contract. I am not a legal expert, but ownership of any financial instrument gives you the right on income designated to the owner. If you own a stock, you are entitled to receive a dividend if it is paid out. If you own a bond, you are entitled to a coupon paying an interest if it is a coupon bond.
On voluntary basis, two contractual parties may arrange a temporary or a permanent change in the dynamics of income on assets, if they find it to be in mutual interest, like when the bank restructures the payments and/or maturity of a loan with their clients. But seizure of income on assets is, in my view, a move over the “red line”, unacceptable and should be an easy, and swift legal dispute in a court of law with a predictable outcome. However, the amounts in case of interest on Russian central bank assets are relatively small in comparison to the principal amount, and therefore, might have been considered as an “acceptable risk” of loss in the court of law in order to “send a message to the aggressor”, and that might have been a point of such a move.
But, getting back to the freezing of assets, that has been done in the first place, it is, in my view, also problematic if the party conducting this freeze would like to remain neutral in the conflict. However, if it does not, it should be prepared that such a move may be enough for retaliatory actions of the opposite side. One could argue that freezing of assets of a party engaged in a war could diminish the capacity to wage war, and therefore may be an incentive for peace negotiations and peace. But, freezing of assets, if it has been done, does not mean that these assets can be stripped from their income which is based on an investment contract. To put it short: freezing of assets is already problematic, but depriving the assets of their income is, in my view and in most cases, a clear breach of the investment contract, and, as such, unacceptable.
Today, under the leadership of Ursula von der Leyen, the European Union would like to go further by using most of the Russian assets — around 140 billion euros — to guarantee a loan to Ukraine via the European Central Bank. The Belgian Prime Minister, Mr Bart De Wever, who has warned that touching the principal would be legally “extremely delicate,” has opposed this project so far. Do you think his understanding of the legal situation is correct?
Of course. If you clear the “fog” of phrases and complicated legal and financial constructions, it comes down to a simple and very similar example: would it be acceptable that the bank, without any court decision but told to do so by a third party, decides to take the money from an account of depositor A without his consent, and puts that money on an account of depositor B? If the depositor A comes with a court decision that the bank needs to restore the deposit on the account of depositor A, and the money has been spent, who is going to be liable? And then that liability is not going to be just for the amount of the deposit, but also for all attached legal fees and possible other compensations.
European sanctions require unanimity to be adopted, as does everything that falls under the Common Foreign and Security Policy (CFSP). Article 31 of the Treaty on European Union indeed states: “Decisions under the Common Foreign and Security Policy shall be taken unanimously by the European Council and the Council.” A Belgian veto would therefore cause Ursula von der Leyen’s plans to fail. The same would apply if any EU member state decided not to vote for the renewal of sanctions, which are put to a vote every six months. Friday 12 December, Ursula von der Leyen found a way to bypass unanimity and have a permanent freeze of Russian assets adopted by qualified majority. (One of the obstacles to any use of the frozen assets is that, if a peace agreement were signed between Russia and Ukraine and the sanctions were not renewed, these assets would have to be returned to Russia.) Ursula von der Leyen relied on Article 122 of the Treaty on the Functioning of the EU (TFEU), which allows the adoption, by qualified majority, of economic measures in the event of a severe crisis. Her reasoning—considered by many experts to amount to legal fiction—is that a permanent freeze of Russian assets would not constitute a sanction, but an economic measure…The Central Bank of Russia has already stated that it will bring the matter before international courts for violation of its sovereign immunity, of international law, and of established financial norms, and that Euroclear would be designated as the responsible operator. How do you view this circumvention of EU rules as a Serb, that is, a citizen of a European country but not a member of the European Union? Do you think Russia will take retaliatory measures? What might those be?
Since your question asks for a specific view from Serbia, my impression is that citizens of Serbia, tend to see, and understand as, double standards many of the decisions made by EU administration in the past. Allow me to name a few.
First: citizens of Serbia, may be willing to forgive, but most probably cannot forget the aggression of NATO in 1999 and bombing of Serbia that lasted 78 days. This war, as it turned out, was waged without any resolution of the UN, and even contrary to the charter of NATO itself. The pretext for this aggression was later proven false by a number of international observers and analysts, and these evidences are available to anyone interested in researching this matter (very similar as for the war on Iraq in 2003).
No war reparations were ever paid to Serbia. Citizens of Serbia only received in 2016 words from NATO general secretary at the time, that he was sorry for the innocent victims of bombing in 1999. EU has never condemned this military aggression in Europe. And one other thing: War on Serbia in 1999 had a direct consequence in secession of Kosovo and Metohia in 2008, which was unconstitutional, but was recognized by most of the EU countries. EU has never officially supported territorial integrity of Serbia.
Citizens of Serbia can clearly see that EU has a rather different approach to territorial issues and EU accession of other countries like Cypress (with territorial dispute in the north), Moldova (with territorial dispute in Transistria), Georgia (with territorial dispute in North Ossetia and Abkhazia), and very obviously Ukraine (with a number of disputed provinces).
Citizens of Serbia support and respect the territorial integrity of every neighboring country and as a principal for the whole European continent, but clearly understand that EU has a different approach to Serbia. So, potential circumvention of its own rules and possible double standards by EU officials does not come as a surprise for citizens of Serbia having their specific set of experiences in the past decades.
Neither would retaliatory actions from the Russian side come as a surprise, and those might be, at least, in a form of seizure of assets of EU countries.
Since the beginning of the discussions, Valérie Urbain, the CEO of Euroclear, has opposed the seizure of Russian assets. She has even hinted that the bank might “take legal action if EU institutions were to order the unilateral confiscation or reallocation of frozen assets.” She has stressed that, given its size (over €40 trillion in assets), Euroclear has systemic importance, and warned: “If confidence in Euroclear is undermined, the contagion effects will be significant.”The indefinite freezing of Russian assets is not outright confiscation, but It nevertheless amounts to a de facto seizure sine die. In your view, how will this be perceived, particularly by non-Western countries? As someone who has headed a central bank and teaches economics, what could be the consequences for the European Union?
First, I would like to support a brave and correct assessment and statement given by Ms. Urbain. She is absolutely right. Confiscation of sovereign assets by Euroclear would undermine not just Euroclear, but all trading in euro denominated securities, including sovereign debt bonds of Eurozone countries, but the euro itself as a global reserve currency.
Long term decline in demand for all euro denominated assets would be a reasonable reaction to such an act, with long term increase of cost of borrowing in euro, especially for the countries of the EU.
Finally, do you think that now that Russian assets are frozen indefinitely, they can more easily be used to guarantee a loan to Ukraine? Next year, for example, because the problem of financing Ukraine won’t disappear until a peace agreement has been signed. In other words, do you think banks might accept such collateral knowing that the very legality of this freeze is questionable and will be challenged in court?
Freezing of assets is already legally very problematic as it is. In my view, no collateralization can be done since no one would invest in a bond with disputed collateral. I would not be surprised to find that “architects” of such ideas do not have theoretical or practical background in finance. Because, finance relies on confidence. It is not possible to maintain and develop a financial system by undermining confidence.
