Moscow Hits Back at the EU's Scheme to Lend Immobilized Russian Assets to Kyiv

Ukraine is facing a severe shortage of financial resources to sustain its military and economy afloat, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to plugging Ukraine's budget hole of €135.7bn for the coming 24 months lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine maintain that money should be used to restore what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself efficiently against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

The Belgian government is worried it will be saddled with an massive bill if it all backfires, and Euroclear head Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to 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?

European Union officials is under pressure before next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has avoided accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• One is to secure the capital on the markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in bonds but have now mostly been converted into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is convinced it has dealt with them.

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

Should Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

If Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a significant move, 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 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 extraordinary measure 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 Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the fallout 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.

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

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

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

"Lenders need to comply with 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 banking laws? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to secure water-tight assurances for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a economically realistic and politically realistic solution".

"It is a decisive moment 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 insistent its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about future co-operation.

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