Russia Retaliates at the EU's Plan to Loan Frozen Moscow's Assets to Ukraine

Kyiv remains running out of financial resources to keep going its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Kyiv's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Moscow's Funds, Say Kyiv and Brussels

Overall, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.

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

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister 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.

The Details of the EU's Strategy?

The EU is under pressure ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

Until now the EU has refrained from using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is sanctioned and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to furnishing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly matured into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and says it is convinced it has resolved them.

The proposal is for Belgium to be shielded with a guarantee encompassing 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.

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

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated 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 "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is firm it remains a strong supporter of Ukraine, but identifies legal risks in the plan and is concerned about being left to handle the fallout if things go wrong.

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

"The Belgian economy is not large. Belgian GDP is about €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to secure water-tight assurances for Euroclear."

The European Union In a Difficult Position from All Sides

The situation is urgent, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and politically achievable solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While 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 for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving