Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Assets to Ukraine

Ukraine is running out of funding to sustain its military and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Kyiv'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 seek to finalize the plan at their EU leaders' conference next week.

Russian officials caution the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Russia's Funds, Say European and Ukrainian Officials

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

The EU and Ukraine contend that those funds should be used to restore what Russia has laid waste to: EU officials terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

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

Russia's court action was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is worried it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

The EU is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can accept.

So far the EU has refrained from using the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and says it is confident it has resolved them.

The scheme 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, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to extend 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 "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is insistent it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being left to handle the consequences if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium worries about an added risk of being exposed to extra legal costs.

Prof Colaert also contends the requirement for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to secure absolute protections for Euroclear."

Europe Under Pressure from Multiple Fronts

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

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about future co-operation.

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