Moscow Hits Back at Europe's Scheme to Loan Frozen Russian Assets to Kyiv

Ukraine is running out of funding to sustain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to plugging Ukraine's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels 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 initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

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

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

The EU and Ukraine contend that money should be used to reconstruct what Russia has laid waste to: The European Commission calls it a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself successfully against future Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Previously the EU has avoided accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as safe as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to borrow the funds on capital markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were at first held in bonds but have now largely matured into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and says it is confident it has addressed them.

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

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

If Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an extraordinary measure 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 Still Not Convinced

Belgium is firm it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things go wrong.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate assurances for the loan itself, Belgium fears an further exposure of being subject to extra legal costs.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would violate EU banking regulations.

"Banks need to follow stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to obtain ironclad guarantees for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It's a matter of destiny for us," says 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be touched, there are added concerns among European figures that the US may want to deploy Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving