Moscow Hits Back at Europe's Plan to Loan Frozen Russian Assets to Kyiv

Ukraine is running out of funding to keep going its armed forces and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to plugging Ukraine's budget hole of €135.7bn for the following biennium is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Funds, Say Ukraine and the EU

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

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz states the assets will "help Ukraine to shield itself successfully against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be left with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

Euroclear also has an roughly €16-17bn immobilised in Russia.

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

The EU is under pressure before next Thursday's summit to finalize a compromise that Belgium can support.

So far the EU has refrained from using the frozen capital directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed less risky as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly matured into cash. That capital is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and claims it is assured it has dealt with them.

The plan is for Belgium to be safeguarded with a assurance encompassing 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.

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously 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 planning 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

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the consequences if things go wrong.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure adequate guarantees for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's another reason why it's so important for Belgium to get water-tight protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a fiscally viable and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be touched, there are further worries among European figures that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

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