Russia Hits Back at the EU's Proposal to Loan Immobilized Moscow's Assets to Kyiv

Ukraine is depleting its cash to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their meeting in Brussels next week.

Authorities in Russia warn 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 even before a conclusive plan is made.

'Appropriate' to Employ Russia's Assets, Say Ukraine and the EU

In total, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv contend that money should be used to reconstruct what Russia has laid waste to: The European Commission terms it a "reparations loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is concerned it will be burdened by an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Plan?

Brussels is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can agree to.

Previously the EU has held off touching the assets themselves directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• One is to secure the capital on financial markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now mostly been converted into cash. That funding is Euroclear property located within the European Central Bank.

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

The proposal is for Belgium to be protected 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 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 judgment by a Russian court would not be recognized in the EU.

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

Previously they have had to vote all together every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not On Board

Brussels is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and fears being left to handle the repercussions if things do not work out.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute guarantees for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to use Russia's blocked funds for another purpose, as part of its own peace plan.

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.

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