Moscow Hits Back at the EU's Proposal to Loan Frozen Russian Assets to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy, after almost four years of Russia's full-scale war.

For Europe, the solution to filling Ukraine's financial shortfall of €135.7bn for the next two years is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Use Russia's Funds, Assert European and Ukrainian Officials

Overall, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has destroyed: EU officials terms it a "reparations loan" and has devised a plan to prop up 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 money then becomes ours," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".

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

The Belgian government is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse 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 Plan?

Brussels is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can accept.

So far the EU has held off using the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly matured into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is assured it has addressed them.

The scheme is for Belgium to be shielded 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, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are expected to agree 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 renew the freeze, which could have meant a ongoing 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 economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and is concerned about being forced to deal with the repercussions if things fail.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is about €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 obtain enough guarantees for the loan itself, Belgium is concerned about an further exposure of being exposed to extra damages or penalties.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to obtain water-tight assurances for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible 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 next. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be used, there are further worries among leaders in Europe that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about possible partnership.

A preliminary version of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving