Moscow Hits Back at the EU's Scheme to Lend Frozen Russian Assets to Ukraine

Ukraine is running out of funding to keep going its military and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to sign that off at their EU leaders' conference next week.

Russian officials warn the EU plan would be an illegal seizure, and the Central Bank of Russia stated 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 European and Ukrainian Officials

Overall, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that that capital should be used to restore what Russia has laid waste to: EU officials calls it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

The EU is working to the wire prior to next Thursday's summit to come up with a solution that Belgium can agree to.

Previously the EU has refrained from touching the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• Option one is to borrow the funds on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were at first held in securities but have now mostly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is confident it has resolved them.

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

If Russia went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote unanimously every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things fail.

A typically divided political landscape 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 around €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough protections for the loan itself, Belgium fears an further exposure of being exposed to extra legal costs.

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get absolute guarantees for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, state a group of 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 practically possible 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 succeed 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 deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving