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

Ukraine is depleting its cash to maintain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the solution to filling Kyiv'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 European Union officials aim to finalize the plan at their EU leaders' conference next week.

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

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

Overall, Russia has roughly €210bn of its assets frozen in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv argue that money should be used to reconstruct what Russia has devastated: EU officials calls it a "loan for reparations" 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 destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be burdened by an massive bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the world's financial order".

Euroclear also has an approximate €16-17bn frozen 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 reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

Brussels is racing against time prior to next Thursday's summit to agree on a solution that Belgium can accept.

Previously the EU has refrained from accessing the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to supplying Ukraine with €90bn, to finance a large portion of its budgetary necessities.

• The first is to secure the capital on the markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now predominantly been converted into cash. That funding is an asset of Euroclear held in the European Central Bank.

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

The plan is for Belgium to be safeguarded with a guarantee covering 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 settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains On Board

Belgium is insistent it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and worries about being shouldering the repercussions if things go wrong.

A usually divided political landscape in this case has united 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 – consider if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure enough protections for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to follow prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to secure water-tight guarantees for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. 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 European figures that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving