Russia Hits Back at the EU's Scheme to Loan Immobilized Moscow's Assets to Kyiv

Ukraine is depleting its funding to maintain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Kyiv's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Employ Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has approximately €210bn of its state reserves 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 devastated: Brussels terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Plan?

The EU is racing against time before next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has avoided using the frozen capital directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as permissible as Russia is under sanction and the returns are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.

• One is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely matured into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is confident it has addressed them.

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

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

If Russia targeted Belgium itself, any decision 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.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Brussels is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the repercussions if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

Prof Colaert also contends the stipulation for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Financial institutions need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and politically achievable solution".

"It's a matter of destiny for us," warns 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 finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating 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 suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving