Russia Hits Back at the EU's Scheme to Loan Frozen Moscow's Assets to Ukraine

Kyiv remains depleting its cash to maintain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months is found in frozen Russian assets located within Belgian bank Euroclear, and Brussels hope to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Just' to Employ Moscow's Assets, Argue Kyiv and Brussels

Overall, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has laid waste to: Brussels calls it a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself effectively against subsequent Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the global financial architecture".

Euroclear also has an estimated €16-17bn locked in Russia.

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

Until now the EU has held off using the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is considered permissible as Russia is under sanction and the proceeds are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to finance a majority of its financial requirements.

• One is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has valid worries and claims it is convinced it has dealt with them.

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

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

Should Russia went after Belgium itself, any decision 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 permanently.

Heretofore 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 stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things go wrong.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes 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 fears an additional danger of being subject to extra damages or penalties.

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

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

There is no time to lose, state seven 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 realistic 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 afterwards. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to employ Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving