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

Ukraine is depleting its financial resources to sustain its military and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the solution to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Just' to Employ Russia's Assets, Argue European and Ukrainian Officials

All told, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that money should be used to reconstruct what Russia has devastated: The European Commission terms it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can support.

Previously the EU has avoided accessing the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed safe as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now largely been converted into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is confident it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being shouldering the fallout if things go wrong.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to get absolute protections for Euroclear."

Europe Under Pressure from Every Direction

There is no time to lose, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most fiscally viable and politically realistic solution".

"This is a crucial test for us," states 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".

While Russia is adamant its money should not be touched, there are further worries among European figures that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about potential collaboration.

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