Russia Hits Back at the EU's Scheme to Lend Frozen Moscow's Assets to Ukraine

Ukraine is depleting its financial resources to keep going its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Ukraine's financial shortfall of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Employ Moscow's Assets, Assert Kyiv and Brussels

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

Brussels and Kyiv argue that that capital should be used to reconstruct what Russia has devastated: Brussels refers to it as a "reparations loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz argues the assets will "help Ukraine to defend itself efficiently against any future Russian attacks".

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

Belgium is anxious it will be saddled with an enormous 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 estimated €16-17bn immobilised in Russia.

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has avoided accessing the assets themselves directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to furnishing Ukraine with €90bn, to pay for a majority of its funding needs.

• Option one is to raise the money on capital markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and states it is confident it has addressed them.

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

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

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

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected 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 financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things fail.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain adequate protections for the loan itself, Belgium is concerned about an added risk of being exposed to extra legal costs.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to comply with stability regulations 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 stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

The European Union Facing Strain from Multiple Fronts

There is no time to lose, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a economically realistic and politically achievable 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 next. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's frozen billions in another way, 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 talking to Russia about future co-operation.

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