Moscow Retaliates at Europe's Plan to Lend Frozen Russian Assets to Kyiv

Kyiv remains facing a severe shortage of financial resources to sustain its armed forces and economy, after close to 48 months of Russia's full-scale war.

For Europe, the answer to addressing Ukraine's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Just' to Use Moscow's Assets, Say European and Ukrainian Officials

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

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself successfully against subsequent Russian attacks".

Russia's court action was foreseen in Brussels. But it is not just Moscow that is unhappy.

Belgium is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has avoided touching the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is seen as permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to providing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it needs 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 providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly been converted into cash. That money is Euroclear property located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is convinced it has addressed them.

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

Should Euroclear suffer a loss 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 judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote all together every six months to continue 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 continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not On Board

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

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would contravene 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 asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad protections for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a economically realistic and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is adamant its money should not be used, there are further worries among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about future co-operation.

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