Moscow Hits Back at Europe's Plan to Lend Frozen Russian Assets to Ukraine

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

For Europe, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to sign that off 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 definitive agreement is made.

'Just' to Use Russia's Funds, Say Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has devastated: The European Commission refers to it as a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

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

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

Brussels is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has avoided touching the frozen capital directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is considered less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to borrow the funds on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now largely turned into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is assured it has addressed them.

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

Should Euroclear face a financial hit 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.

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

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore 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 set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and worries about being left to handle the fallout if things do not work out.

A normally fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

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

Prof Colaert also contends the demand 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 asking Euroclear to do exactly 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 rescue Euroclear. That's an additional reason why it's so crucial for Belgium to obtain absolute guarantees for Euroclear."

Europe In a Difficult Position from Every Direction

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a fiscally viable and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 insistent its money should not be touched, there are added concerns among leaders in Europe that the US may want to deploy Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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