Russia Hits Back at the EU's Plan to Lend Immobilized Moscow's Assets to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to filling Kyiv's financial shortfall of €135.7bn for the following biennium lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to give it the green light at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Argue Kyiv and Brussels

In total, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has laid waste to: EU officials terms it a "reparations loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "enable Ukraine to protect itself efficiently against future Russian attacks".

Russia's court action was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is worried it will be saddled with an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

Euroclear also has an approximate €16-17bn frozen in Russia.

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has refrained from accessing the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• One is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That funding is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is convinced it has dealt with them.

The plan is for Belgium to be safeguarded with a assurance covering all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being shouldering the fallout if things go wrong.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra legal costs.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Financial institutions need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain absolute guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the financially feasible and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving