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

Ukraine is depleting its cash to keep going its armed forces and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the remedy to addressing Ukraine's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Utilize Moscow's Assets, Argue Ukraine and the EU

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

Brussels and Kyiv argue that money should be used to restore what Russia has laid waste to: Brussels calls it a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is concerned it will be left with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate 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?

Brussels is under pressure prior to next Thursday's summit to come up with a compromise that Belgium can support.

Until now the EU has held off using the frozen capital directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

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

There are currently two EU proposals seeking to providing Ukraine with €90bn, to finance a large portion of its financial requirements.

• One is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now largely turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is confident it has dealt with them.

The proposal is for Belgium to be shielded with a assurance applying to all the €210bn of Russian assets in the EU.

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

Should Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore 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 set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains Convinced

Belgium is firm it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things fail.

A typically 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, professor of financial law at KU Leuven University.

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an added risk of being subject to extra fines or liabilities.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

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

Europe In a Difficult Position from All Sides

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most fiscally viable and practically possible solution".

"It is a decisive moment 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 adamant its money should not be used, there are further worries among EU officials that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging 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