Russia Hits Back at Europe's Proposal to Loan Immobilized Moscow's Assets to Kyiv

Ukraine is running out of cash to keep going its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Ukraine's budget hole of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Russian officials state 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 prior to a final decision is made.

'Just' to Utilize Moscow's Assets, Say European and Ukrainian Officials

In total, Russia has roughly €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that that capital should be used to reconstruct what Russia has laid waste to: EU officials calls it a "reconstruction loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

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

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

The Belgian government is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

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

Until now the EU has held off touching the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

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

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• One is to raise the money on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now mostly turned into cash. That funding is owned by Euroclear located within the European Central Bank.

The EU's executive accepts Belgium has justified fears and says it is convinced it has resolved them.

The scheme is for Belgium to be safeguarded with a insurance 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 settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced 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.

Previously 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 planning to use an emergency clause 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 Remains Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but sees legal risks in the plan and fears being forced to deal with the repercussions if things go wrong.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured 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.

While the EU might be able to arrange adequate protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would breach EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure absolute guarantees for Euroclear."

The European Union Facing Strain from Multiple Fronts

There is no time to lose, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic and politically achievable solution".

"It is a decisive moment for us," states 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 unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

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