Moscow Retaliates at Europe's Proposal to Loan Immobilized Russian Assets to Ukraine

Kyiv remains depleting its funding to keep going its military and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Russia's Assets, Argue Ukraine and the EU

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

European and Ukrainian authorities maintain that that capital should be used to reconstruct what Russia has laid waste to: Brussels calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to protect itself efficiently against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

The Belgian government is anxious it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with 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 "presents significant risks" for his country.

What is the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has held off accessing the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is under sanction and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the deficit caused by the US decision to virtually halt 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 financial requirements.

• The first is to raise the money on the markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now largely turned into cash. That capital is owned by Euroclear located within the European Central Bank.

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

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

If Euroclear incur losses 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 enforced 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 indefinitely.

Until now they have had to vote all together every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Belgium is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the repercussions if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium worries about an further exposure of being vulnerable to extra legal costs.

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

"Financial institutions need to follow prudential rules 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 secure. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to obtain water-tight guarantees for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible and practically possible solution".

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

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

Zelensky has said 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 possible partnership.

A preliminary version 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