Russia Hits Back at Europe's Plan to Lend Immobilized Russian Assets to Ukraine

Kyiv remains running out of funding to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the solution to plugging Ukraine's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Russian officials caution 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 ahead of a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Argue Ukraine and the EU

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

The EU and Ukraine maintain that those funds should be used to rebuild what Russia has laid waste to: Brussels terms it a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself efficiently against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is worried it will be left with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the international financial system".

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

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

Explaining the EU's Strategy?

The EU is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has held off using the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is deemed safe as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to secure the capital on the markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now largely matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

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

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

If Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an special provision 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 Not Yet Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and worries about being shouldering the fallout if things go wrong.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

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

Although the EU might be able to secure enough guarantees for the loan itself, Belgium fears an further exposure of being subject to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to issue credit 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.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to obtain ironclad protections for Euroclear."

EU Leaders Under Pressure from Every Direction

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable 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 reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been holding discussions with Russia about potential collaboration.

A preliminary version 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