American presidents, and President Donald Trump in particular, have dramatically increased the use of emergency powers in the last few years. They have used emergency powers to pursue aggressive economic sanctions policies, forgive student loan debt, and overhaul U.S. trade policy, among many other things. It turns out that the U.S. executive branch is not alone in treating emergency powers like bottomless sources of legal authority. The European Union has done this too. And not unlike in the United States, the more aggressive the EU got in using executive authority, the more political and judicial backlash it faced.
The most recent illustration of the EU leaning into emergency powers is its reliance on an emergency provision in the EU treaties, Article 122 of the Treaty on the Functioning of the European Union (TFEU), to indefinitely immobilize roughly $246 billion in Russian Central Bank assets and reserves held by European financial institutions, and prevent the enforcement of contrary judgments. The EU also contemplated, but did not ultimately pursue, a follow-on measure that would allow it to borrow against those assets to provide loans to Ukraine to support its reconstruction. Instead, an overwhelming majority of European States agreed to borrow over $100 billion for Ukraine against the EU budget, to be repaid only once Russian reparations arrive. These moves raise serious questions under both international and EU law, and they have quickly triggered a strong political and legal response.
Those concerns notwithstanding, many have sympathized with the desire of major EU players to find creative ways to support Ukraine. We have argued in our article, Emergency Powers for Good, that certain measures at odds with the current international and domestic legal framework could nevertheless be justified. We developed a test that upholds some emergency measures that transform a society rather than returning it to the status quo before the emergency. Our test to justify transformative emergency measures requires a genuine emergency, broad consensus, protection of particularly vulnerable groups, and time limits.
Most U.S. emergency measures that pushed even the limits of the permissive U.S. emergency framework—such as President Joe Biden’s student debt forgiveness plan and Trump’s border wall project—do not pass this stringent test. We had to go back to President George W. Bush’s bailout of the auto-industry, with the support of Democratic congressional leadership and both the outgoing and newly elected-president, to find an emergency measure that would pass our test.
In contrast, we favorably assessed key EU emergency responses to the Covid pandemic, such as the transformative one trillion New Generation EU stimulus package that reshaped the EU economy. Now, we’re revisiting our analysis for the current emergency the EU faces: the growing threat from Russia and the Trump administration’s rejection of the Transatlantic Alliance in favor of peace with Moscow. We argue that although it would have been difficult to justify borrowing against Russian assets, not only because of the strong international law protections for sovereign funds—but also because of forceful opposition from a sizeable minority of European States—the alternative plan to borrow against the EU budget to help Ukraine passes our stringent test.
The “Sleeping Beauty” of the EU Treaties?
Until recently, the EU—ostensibly a creature of limited competences—hardly ever relied on residual emergency authority to make new law. But in the wake of Covid and the Russian invasion of Ukraine in 2022, the EU rediscovered a forgotten emergency provision in its founding treaties: Article 122 TFEU. Article 122(1) provides that
… the [EU] Council, on a proposal from the Commission, may decide… 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.
Article 122(2) further provides that
[w]here 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… Union financial assistance to the Member State concerned.
The main advantage of using Article 122 over standard sources of authority is that it allows a super-majority of member States to circumvent more complicated EU lawmaking procedures. Of particular relevance here is the fact that most EU Council decisions related to EU Common Foreign and Security Policy (CFSP) must be adopted unanimously. By contrast, Article 122 only requires a super-majority of member States for a regulation to be approved. Additionally, fewer EU institutions need to opt in for a regulation to be passed under Article 122. Both the EU Council and the Parliament need to agree with the Commission’s proposal in the ordinary legislative procedure.
The appeal of relying on Article 122 should be clear. Unanimity is elusive in a body consisting of 27 member States. Several members have become regular spoilers that effectively veto major EU initiatives or constantly extract exorbitant concessions in return for their vote. And Parliament operates under a different incentive system than the more technocratic Commission and Council.
Yet it was only recently that Article 122 came to the fore of EU lawmaking. Since the current version of the EU treaties entered into force in 2009, the EU invoked Article 122 a total of 22 times. Seventeen of those regulations were enacted after 2020. The EU relied on Article 122, among other instances, to effectively double the EU budget and realign EU investment and energy policies. This was in response to the economic damage wrought by Covid, and the threat to EU energy supply after the Russian invasion of Ukraine. Alberto Gregorio de Merino, the EU Commission’s top lawyer, has called Article 122 the “sleeping beauty” of the EU treaties; a provision that existed in some form since the 1950s, but was only recently rediscovered as a basis for far-reaching EU legislation under the guise of emergency.
More recently, the EU invoked Article 122 to address the war in Ukraine beyond the energy crisis. In March 2025, the Council relied on Article 122 to create the so-called SAFE instrument for the EU defense industry. SAFE provides financial assistance up to €150 billion to EU members to allow them to increase public investments in the European defense industry. The Council justified the use of emergency authority for this measure by citing “the current exceptional security context” and the “need to make urgent and massive investments in the EU’s defence manufacturing capacities.”
The use of Article 122 for this purpose did not go unopposed. The EU Parliament is pursuing litigation against the Council and Commission, primarily challenging the decision to end-run Parliament by relying on Article 122. The objection is not to the substance of the measure, but rather the use of emergency authority and the truncated procedure it allows—at the expense of the only democratically elected EU body. What the Parliament seeks is for the measure to stay in place, and for member States to be able to borrow and build up their defense industries, until new legislation that accomplishes the same goal with EU Parliament input is passed.
The Russian Central Bank Measures
For some time now, there has been talk of permanently seizing the assets of the Central Bank of Russia or repurposing them to support the reconstruction of Ukraine. But the United States and the EU have stopped short of taking that step. Freezing roughly $300 billion in Central Bank assets between the United States, the EU, and other G7 members was already a stretch. An asset freeze may be justifiable under international law as a countermeasure against Russia’s many violations of foundational international law norms. Yet countermeasures must be temporary and reversible. Permanently seizing central bank assets is a different proposition entirely.
Under international law, central bank assets are immune from execution in foreign States. Unlike the broader law of State immunity, which has developed sizable exceptions for commercial activity over time, the immunity of central bank assets has only grown stronger. Underlying this protection is a combination of reciprocity concerns and respect for the special function central banks preform in national and international economies. The International Court of Justice’s recent ruling in Certain Iranian Assets (Iran v. United States) did not disturb this legal status quo. Although the Court effectively sanctioned the attachment of $1.75 billion in Iran’s Central Bank assets in the United States to satisfy domestic judgements issued in favor of victims of Iran-sponsored terrorist attacks, the ICJ skirted the substance of the central bank immunity question.
On the domestic level, senior members of the Biden administration officially stated they believed the United States lacked domestic or international legal authority to permanently seize Russia’s central bank assets and transfer them to Ukraine. The U.S. Foreign Sovereign Immunities Act explicitly recognizes the immunity from execution of central bank assets. U.S. domestic law gives the president extremely broad authority to regulate economic transactions if he declares a national emergency. But seizure (vesting) authority exists only during an armed conflict in which the United States is a direct participant. There are some relatively narrow exceptions, but none straightforwardly apply to wholesale confiscation of Russian Central Bank assets. Although the United States has certainly played a central role in the Ukraine war, it is highly doubtful it is in an outright state of war with Russia. Nor, we suspect, is this a legal position the Trump administration would be willing to embrace. The political and legal ramifications of the United States essentially declaring war on Russia are a strong deterrent.
By contrast, key EU members have increasingly shown flexibility with respect to the disposition of the Russian Central Bank assets held in EU financial institutions, primarily in Belgium. With the U.S. role and degree of support for Ukraine constantly shifting under Trump, and transatlantic relations in a deep state of disrepair, the EU has found itself isolated in its effort to prevent Russia from further increasing its hold on Ukraine and threatening EU members directly. Supporting Ukraine by tapping into the blocked Russian assets gained political traction.
As a first step, the EU in December again invoked Article 122 to indefinitely immobilize the frozen assets of the Russian Central Bank within its jurisdiction and prohibit their return to Russia. Until now, the EU had to periodically extend the measures freezing the assets, and securing the necessary support from member States each time became taxing and uncertain. Members friendly to Russia, such as Hungary and Slovakia, have separated themselves from the bloc on this issue.
The new immobilization regulation “establishes exceptional and temporary emergency measures addressing the serious economic difficulties within the Union caused by Russia’s actions … and the risk of further deterioration of the economic situation in the Union.” It states that the “measures aim to avoid a serious deterioration of the economic stability in the Union and its Member States by preventing significant resources being made available to Russia to continue its actions in the context of the war of aggression against Ukraine.”
In other words, the regulation frames the situation with Russia as constituting an economic emergency for the Union, and asserts a causal relationship between releasing Russian Central Bank assets and supporting Russia’s nefarious activities affecting the EU. At the same time, the Regulation makes clear that the measure does not alter the property rights in the assets. It highlights the temporary and reversible nature of the action, likely to address concerns under international law. The regulation also makes unenforceable in the EU arbitral tribunal decisions and court judgments that Russia might obtain, building on a controversial line of EU jurisprudence invalidating intra-EU investment arbitration.
While the indefinite freezing of the assets can by justified under international law, the use of Article 122 for this purpose raises substantial questions under EU law. Normally, economic sanctions measures are adopted under the CFSP chapter of the Treaty on European Union (TEU) and Article 215 of the TFEU, which governs economic sanctions (“restrictive measures” in EU speak). Under Article 31 TEU, an EU Council decision adopted unanimously is required as a first step. Clearly, the use of Article 122 in this instance was designed to circumvent opposition by member States more partial to Russia and immunize the immobilization of Russian Central Bank assets against future reversals. Critics within the EU again charged that powerful member States are using emergency authority to circumvent the appropriate, specific legal mechanism for amending EU sanctions.
The objections to the use of Article 122 proved powerful. EU members including Germany sought to rely on the provision to not only immobilize Russian assets, but also to borrow against them to provide forgivable loans to facilitate the reconstruction of Ukraine. That type of action would cross the legal line between temporary and likely permissible freezing of the assets to something that resembles permanent seizure. The EU proponents of the move tried to address the permanence and irrevocability concern by structuring the loans so that the money would be paid back eventually. But that would only happen after Ukraine receives reparations from Russia for the latter’s grave international law violations. We are not holding our breath.
Key EU actors like Belgium, where most of the assets are held, vehemently opposed the initiative and reliance on Article 122 to facilitate it. Scholars argued the move would be unlawful under EU law, because the Union would again be end-running the normal constitutional process specific to restrictive measures and excluding certain members. Eventually, the initiative failed. In late December, the EU approved €105 in loans for Ukraine without involving the Russian assets. Twenty-five of the EU’s 27 member States firmly supported this measure. It is unclear what legal authority the EU will invoke to operationalize such a plan. Article 122 is again a leading contender.
The Correct Role for Emergency Powers
Recent U.S. and EU practice on major regulatory initiatives reveals similar trends of fallback to emergency powers. Emergency authority, by its very nature, entails simplified procedures and broad discretion, giving executives substantial leeway to advance their desired policies when other legal routes are inconvenient or foreclosed. These trends are motivated in part by growing political polarization that makes legislative progress through standard routes difficult or entirely unattainable. They are also a product of increasingly powerful executives who have their own views about what the rule of law entails. And sometimes, they are necessary responses to true crises.
As a legal matter, borrowing against Russian frozen assets against an expectation of unlikely future Russian reparations is likely unlawful under international law. And it would be another untested extension of Article 122 that raises internal EU federalism and separation of powers issues. The latter problem would likewise arise if the loan to Ukraine that the EU Council just greenlit is grounded in Article 122. Although Article 122 broadly refers to measures “appropriate to the economic situation,” it specifies classic economic harms like supply chain disruption or energy crises. Collateral damage from the war in Ukraine and localized Russian aggression does not neatly fit in this category. Indeed, foreign and security policy is an area in which member States reserve their competence. Overriding member States with emergency authority seems to conflict with the limited nature of EU competence. At the same time, the current exceptional situation with Russia is exactly the kind of situation for which emergency authority exists. A broad reading of the text of Article 122 would extend it to this crisis.
That said, perhaps the best way to describe what we have here is an “unlawful but justified” situation. Our framework in Emergency Powers for Good would uphold a formally unlawful emergency measure under certain conditions: a real emergency, temporariness, protection for particularly vulnerable groups and broad consensus in support of the measure. In our view, an EU loan to Ukraine excluding Russian assets would easily meet those tests.
