Moscow Responds at Europe's Scheme to Loan Immobilized Russian Assets to Ukraine

Kyiv remains depleting its financial resources to sustain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the solution to plugging Kyiv's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Employ Russia's Assets, Say Kyiv and Brussels

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

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

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

Belgium is anxious it will be saddled with an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

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

Until now the EU has avoided using the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to furnishing Ukraine with €90bn, to pay for a majority of its financial requirements.

• Option one is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely turned into cash. That money is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has addressed them.

The plan is for Belgium to be shielded with a assurance applying to all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

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

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning 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 Remains Satisfied

Belgium is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and fears being shouldering the repercussions if things do not work out.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra damages or penalties.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most financially feasible and politically realistic solution".

"It's a matter of destiny for us," says 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 succeed in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has said 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 future co-operation.

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