Russia Hits Back at Europe's Proposal to Lend Frozen Moscow's Assets to Ukraine

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

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the coming 24 months lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Employ Moscow's Funds, Argue Ukraine and the EU

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

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

So far 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. Legally, using the interest is considered permissible as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• One is to raise the money on financial markets, guaranteed by 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 problematic when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

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

The plan 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 shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an extraordinary measure 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.

The Reasons Belgium is Still Not Satisfied

Brussels is firm it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being shouldering the fallout if things go wrong.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

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

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight protections for Euroclear."

Europe Under Pressure from Multiple Fronts

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the financially feasible and politically achievable solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 used, there are further worries among European figures that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace plan.

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

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