Moscow Retaliates at the EU's Plan to Loan Frozen Russian Assets to Ukraine

Kyiv remains facing a severe shortage of financial resources to sustain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to filling Ukraine's budget hole of €135.7bn for the following biennium rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Use Russia's Funds, Argue Ukraine and the EU

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

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has destroyed: EU officials terms it a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against future Russian attacks".

Russia's court action was foreseen in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to agree on a compromise that Belgium can agree to.

So far the EU has avoided using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed safe as Russia is sanctioned and the returns are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to furnishing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were at first held in securities but have now predominantly matured into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission accepts Belgium has justified fears and says it is convinced it has dealt with them.

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

Should Euroclear suffer a loss 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 went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely 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 planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is insistent it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being forced to deal with the repercussions if things do not work out.

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

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

While the EU might be able to arrange enough protections for the loan itself, Belgium worries about an added risk of being subject to extra fines or liabilities.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

There is no time to lose, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a fiscally viable and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 accessed, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

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

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