Moscow Hits Back at Europe's Plan to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains running out of funding to maintain its military and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Ukraine's budget hole of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

The EU and Ukraine contend that those funds should be used to rebuild what Russia has destroyed: The European Commission refers to it as a "loan for reparations" and has devised a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is worried 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 global financial architecture".

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

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

The Details of the EU's Plan?

European Union officials is working to the wire before next Thursday's summit to agree on a compromise that Belgium can agree to.

So far the EU has refrained from touching the principal funds directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were at first held in bonds but have now predominantly turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is convinced it has resolved them.

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

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

If Russia targeted Belgium itself, any judgment by a Russian court would not be accepted 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 indefinitely.

Heretofore 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 special provision 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.

The Reasons Belgium is Remains On Board

The Belgian government is adamant it remains a staunch ally of Ukraine, but identifies legal risks in the plan and is concerned about being left to handle the repercussions if things fail.

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

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

Although the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an added risk of being subject to extra fines or liabilities.

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure water-tight protections for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a financially feasible 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 next. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be used, there are further worries among EU officials that the US may want to employ Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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