Russia Retaliates at the EU's Plan to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains depleting its funding to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to filling Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to give it the green light at their EU leaders' conference next week.

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

'Only Fair' to Use Moscow's Assets, Argue European and Ukrainian Officials

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

The EU and Ukraine contend that those funds should be used to rebuild what Russia has devastated: Brussels calls it a "reparations loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against future Russian attacks".

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

The Belgian government is concerned it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

The EU is working to the wire prior to next Thursday's summit to finalize a arrangement that Belgium can accept.

Previously the EU has refrained from using the frozen capital directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options designed to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to raise the money on the markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now largely matured into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is convinced it has addressed them.

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

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

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is firm it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the repercussions if things go wrong.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

There is no time to lose, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and practically possible 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 next. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be touched, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions in another way, as part of its own peace initiative.

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

An early draft 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