Moscow Retaliates at the EU's Plan to Loan Frozen Russian Assets to Ukraine

Ukraine is depleting its financial resources to keep going its military and economy, after almost four years of Russia's full-scale war.

For Europe, the solution to plugging Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to sign that off at their EU leaders' conference next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Use Moscow's Assets, Argue Kyiv and Brussels

In total, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv argue that money should be used to restore what Russia has laid waste to: EU officials terms it a "reconstruction loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to defend itself effectively against subsequent Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

The Belgian government is worried it will be burdened by an huge bill if it all backfires, and Euroclear head Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can accept.

So far the EU has held off accessing the frozen capital directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to providing Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now mostly matured into cash. That money is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has valid worries and states it is confident it has resolved them.

The proposal is for Belgium to be shielded with a insurance covering 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.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

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

Why Belgium is Not Yet Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the fallout if things fail.

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

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain enough guarantees for the loan itself, Belgium is concerned about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also believes the stipulation for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to secure absolute assurances for Euroclear."

Europe Under Pressure from All Sides

The situation is urgent, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. 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 EU officials that the US may want to use Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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