Moscow Hits Back at Europe's Plan to Lend Immobilized Russian Assets to Kyiv

Ukraine is depleting its funding to keep going its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to plugging Kyiv's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Moscow's Assets, Assert Ukraine and the EU

Overall, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine contend that those funds should be used to rebuild what Russia has laid waste to: Brussels calls it a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the world's financial order".

Euroclear also has an roughly €16-17bn locked 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 left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

The EU is under pressure prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has refrained from accessing the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• One is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has justified fears and states it is assured it has addressed them.

The scheme is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses 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.

Should Russia went after Belgium itself, any judgment by a Russian court would not be accepted 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 all together every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things go wrong.

A typically partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

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

The European Union Facing Strain from All Sides

Time is of the essence, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and politically achievable solution".

"It is a decisive moment for us," states 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated 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 potential collaboration.

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