Moscow Responds at Europe's Plan to Loan Frozen Russian Assets to Kyiv

Ukraine is facing a severe shortage of funding to keep going its military and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the solution to plugging Kyiv's funding gap of €135.7bn for the coming 24 months lies 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.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Use Moscow's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv maintain that those funds should be used to restore what Russia has destroyed: Brussels terms it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to protect itself successfully against future Russian attacks".

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

The Belgian government is worried it will be saddled with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

European Union officials is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Until now the EU has refrained from touching the assets themselves directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to raise the money on financial markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be problematic 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 initially held in securities but have now largely turned into cash. That capital is owned by Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has justified fears and states it is confident it has addressed them.

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

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

Should Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to extend 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 stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and worries about being left to handle the consequences if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure sufficient protections for the loan itself, Belgium fears an added risk of being exposed to extra damages or penalties.

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

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

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about possible partnership.

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