Moscow Hits Back at Europe's Plan to Lend Frozen Russian Assets to Kyiv

Ukraine is running out of financial resources to maintain its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Use Moscow's Assets, Say Kyiv and Brussels

All told, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has devastated: The European Commission calls it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

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

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

The Belgian government is concerned it will be saddled with an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

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

So far the EU has refrained from accessing the frozen capital directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as less risky as Russia is sanctioned and the earnings are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly been converted into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is confident it has addressed them.

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

If Euroclear face a financial hit 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 took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to permanently block 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 expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is firm it remains a strong supporter of Ukraine, but sees legal risks in the plan and worries about being forced to deal with the repercussions if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra legal costs.

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. 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 stable. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight assurances for Euroclear."

Europe Under Pressure from Every Direction

There is no time to lose, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most fiscally viable and practically possible solution".

"It is a decisive moment 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 reach an agreement in a week's time".

Although Russia is insistent its money should not be touched, there are further worries among European figures that the US may want to use Russia's frozen billions differently, as part of its own diplomatic proposal.

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

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