Moscow Hits Back at Europe's Proposal to Lend Frozen Russian Assets to Ukraine

Ukraine is running out of funding to sustain its armed forces and economy, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Assert Ukraine and the EU

In total, Russia has about €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities argue that that capital should be used to restore what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

Belgium is worried it will be left with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Plan?

Brussels is racing against time before next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has avoided accessing the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is deemed permissible as Russia is subject to sanctions and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in bonds but have now predominantly matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and states it is assured it has resolved them.

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

If Euroclear incur losses 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.

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

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet On Board

Brussels is insistent it remains a committed partner of Ukraine, but sees legal risks in the plan and worries about being forced to deal with the consequences if things fail.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium worries about an added risk of being subject to extra fines or liabilities.

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

"Financial institutions need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most fiscally viable and politically achievable solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

Although Russia is insistent its money should not be used, there are further worries among European figures that the US may want to deploy 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 reconstruction fund, but he is also aware the US has been engaging with Russia about future co-operation.

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