Russia Hits Back at the EU's Proposal to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains running out of financial resources to sustain its military and economy, after close to 48 months of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's funding gap of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

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

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

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has devastated: EU officials calls it a "reparations loan" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself effectively against subsequent Russian attacks".

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

Belgium is anxious it will be left with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has avoided using the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is assured it has dealt with them.

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

Should 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.

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are set to approve on Friday to immobilise 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 set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Remains On Board

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

A usually divided political landscape 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 shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute assurances for Euroclear."

Europe In a Difficult Position from All Sides

Time is of the essence, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most fiscally viable and practically possible solution".

"It's a matter of destiny for us," says 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 touched, there are further worries among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about potential collaboration.

A preliminary version of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving