Moscow Hits Back at Europe's Scheme to Loan Frozen Russian Assets to Ukraine

Kyiv remains running out of financial resources to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the answer to addressing Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Use Russia's Funds, Argue European and Ukrainian Officials

All told, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities argue that money should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy to the tune of €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," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is anxious it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

European Union officials is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has avoided using the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is under sanction and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to borrow the funds on the 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 frozen Russian funds, which were at first held in bonds but have now predominantly been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and claims it is confident it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the consequences if things do not work out.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine 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 sufficient assurances for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

There is no time to lose, caution 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 economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 additional apprehensions among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions 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 early draft of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving