Russia Hits Back at Europe's Scheme to Loan Frozen Moscow's Assets to Kyiv

Kyiv remains depleting its cash to maintain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Employ Moscow's Assets, Assert Ukraine and the EU

All told, Russia has about €210bn of its funds frozen in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has laid waste to: The European Commission calls it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be left with an enormous bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM 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 refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has held off accessing the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as less risky as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• The first is to secure the capital on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly matured into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and says it is convinced it has addressed them.

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

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

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

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

Until now they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning to use an emergency clause 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.

The Reasons Belgium is Not Yet On Board

The Belgian government is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being left to handle the fallout if things go wrong.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

Prof Colaert also contends the demand for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Banks need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is telling 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 turn sour it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight assurances for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically realistic solution".

"It is a decisive moment for us," states 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 finalize the deal in a week's time".

Although Russia is adamant its money should not be used, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about potential collaboration.

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