[ Flash ] European Suicide

To sidestep potential vetoes, the European Council has invoked Article 122 of the TFEU to freeze Russian assets indefinitely. It’s a legal sleight of hand—one as reckless as it is perilous.

The behavior of the overwhelming majority of European leaders merely confirms what the Trump administration’s “National Security Strategy” already stated. The European Union is no democratic haven. The rule of law there is nothing more than an empty mantra—recited loudly, practiced rarely.

To permanently freeze Russia’s sovereign assets, the European Council—more precisely Coreper, the club of permanent representatives made up of ambassadors who dutifully follow their governments’ orders—has, at the Commission’s prompting, decided by qualified majority to invoke Article 122 of the Treaty on the Functioning of the European Union (TFEU). The goal? To sidestep any inconvenient vetoes. A procedural workaround dressed up as statesmanship.

What does Article 122 of the TFEU state?

1. Without prejudice to any other procedures provided for in the Treaties, the Council, on a proposal from the Commission, may decide, in a spirit of solidarity between Member States, upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy.

2. Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken.Autant dire que cette décision ne tiendra pas deux minutes devant la CJUE.

• Ukraine is not an EU member state.

• No EU country is facing any serious threat from natural disasters or unforeseen emergencies.

• There is no significant disruption in the supply of key goods, including energy.

In other words, this is pure, unvarnished illegality. So brazen, in fact, that even the City is sounding the alarm: such a move risks blowing up Euroclear—a critical infrastructure of the entire European bond market. And when Euroclear goes, the bond markets themselves go with it. What they are circuitously trying to acheive is the infamous “European Single Capital Market” that no ones wants. Nothing better than starting with debt.

And where do states issue their debt? On the bond markets. Cutting off Russian gas was shooting ourselves in the foot. This, however, is shooting ourselves squarely in the head. We laid out the consequences of such a decision in the article below.

[ Russian Assets ] A History of Sheer Madness

A major unknown remains: Washington’s reaction. Because this latest episode once again seems designed to torpedo the White House’s attempts at peace. The Council’s claim that the United States might seize these assets is laughable.

What state or financial institution would now be reckless enough to keep operating heavily on European bond markets?
Who will still trust Euroclear to hold their assets and settle their trades?

The EU’s institutions have become such a liability that one could be forgiven for thinking the only urgent solution is to dismantle them—and bring to justice all those who, since the Covid era, have driven the continent into the ground to preserve their own privileges.

We’ll soon see whether Belgium’s Prime Minister, Bart De Wever, will match his words with deeds and urgently challenge this decision to have it suspended. While he’s at it, he might also speed up the corruption investigations involving the Commission and the European Parliament—there’s no shortage of them, and they fall squarely under Belgium’s jurisdiction.

Moscow, for its part, will undoubtedly respond in court and freeze all European assets in Russia—whose value far exceeds the €210 billion at stake.