Russia Responds at Europe's Scheme to Loan Frozen Moscow's Assets to Ukraine

Kyiv remains depleting its funding to maintain its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Utilize Russia's Assets, Say Ukraine and the EU

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

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has laid waste to: EU officials terms it a "loan for reparations" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is anxious it will be burdened by an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

European Union officials is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has refrained from using the principal funds directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is seen as safe as Russia is under sanction and the earnings are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to raise the money on financial markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly turned into cash. That capital is an asset of Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has valid worries and says it is convinced it has addressed them.

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

Should Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are expected to agree 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 renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

Brussels is firm it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the repercussions if things fail.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium fears an additional danger of being exposed to extra damages or penalties.

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

"Lenders need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure absolute assurances for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.

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