Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Assets to Ukraine

Kyiv remains depleting its funding to sustain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the next two years is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Russia's Funds, Say Kyiv and Brussels

All told, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to reconstruct what Russia has devastated: Brussels terms it a "reparations loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "enable Ukraine to protect itself successfully against future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be burdened by an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

Brussels is working to the wire before next Thursday's summit to agree on a solution that Belgium can accept.

Until now the EU has refrained from accessing the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as safe as Russia is subject to sanctions and the returns are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options designed to providing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to borrow the funds on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly turned into cash. That money is an asset of Euroclear deposited at the European Central Bank.

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

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated 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 permanently.

Until now they have had to vote unanimously every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected 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.

Why Belgium is Remains Convinced

The Belgian government is insistent it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and is concerned about being forced to deal with the consequences if things fail.

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

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an additional danger of being exposed to extra damages or penalties.

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute protections for Euroclear."

Europe Under Pressure from All Sides

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and practically possible solution".

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

Although Russia is insistent its money should not be used, there are added concerns among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about possible partnership.

An early draft of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving