Moscow Hits Back at the EU's Plan to Loan Frozen Russian Assets to Ukraine

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

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to finalize the plan at their Brussels summit next week.

Moscow's representatives state 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 even before a final decision is made.

'Only Fair' to Employ Russia's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv argue that that capital should be used to reconstruct what Russia has devastated: Brussels calls it a "loan for reparations" and has proposed 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 rebuild what Russia has devastated – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself efficiently against subsequent Russian attacks".

Russia's court action was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

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

Until now the EU has held off accessing the assets themselves directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• One is to borrow the funds on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now predominantly matured into cash. That capital is an asset of Euroclear held in the European Central Bank.

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

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

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

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

In a key development, 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 extend the freeze, which could have meant a ongoing 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 "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

Brussels is insistent it remains a strong supporter of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the fallout if things go wrong.

A usually fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

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

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

"Banks need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure water-tight assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

There is no time to lose, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the fiscally viable and practically possible solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 accessed, there are additional apprehensions among leaders in Europe that the US may want to use Russia's blocked funds 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 aware the US has been holding discussions with Russia about potential collaboration.

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