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

Ukraine is depleting its cash to maintain its military and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the solution to addressing Ukraine's funding gap of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Use Moscow's Funds, Say European and Ukrainian Officials

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: EU officials terms it a "loan for reparations" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

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

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is working to the wire ahead of next Thursday's summit to finalize a solution that Belgium can accept.

So far the EU has held off using the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• One is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly matured into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is confident it has dealt with them.

The plan is for Belgium to be safeguarded with a insurance 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 settlement agency which are in the EU.

Should Russia targeted 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 immobilise 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 repeated risk to Belgium.

The EU ambassadors are planning 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 security of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the repercussions if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to arrange enough protections for the loan itself, Belgium worries about an additional danger of being subject to extra legal costs.

Prof Colaert also contends the stipulation for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to get absolute assurances for Euroclear."

The European Union Under Pressure from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be touched, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving