Moscow Retaliates at Europe's Proposal to Lend Immobilized Russian Assets to Kyiv

Ukraine is running out of financial resources to maintain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to addressing Ukraine's budget hole of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

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

In total, Russia has approximately €210bn of its assets blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that money should be used to reconstruct what Russia has destroyed: EU officials calls it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

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

Belgium is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has held off accessing the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is seen as permissible as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now largely matured into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has justified fears and claims it is assured it has resolved them.

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

If 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.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

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

The Reasons Belgium is Remains On Board

Belgium is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being shouldering the consequences if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an added risk of being exposed to extra fines or liabilities.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain water-tight guarantees for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the economically realistic and practically possible 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with Russia about future co-operation.

A preliminary version of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving