Moscow Retaliates at the EU's Proposal to Loan Immobilized Russian Assets to Kyiv

Ukraine is facing a severe shortage of financial resources to keep going its military and economy, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Russian officials caution 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 prior to a conclusive plan is made.

'Only Fair' to Employ Moscow's Assets, Assert Ukraine and the EU

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has devastated: Brussels calls it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to protect itself effectively against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

The Belgian government is worried it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "undermine 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 agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

The EU is under pressure before next Thursday's summit to agree on a arrangement that Belgium can agree to.

Previously the EU has held off touching the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as less risky as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were at first held in securities but have now largely turned into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is confident it has dealt with them.

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

Should Euroclear incur losses 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.

Should Russia went after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Remains On Board

Belgium is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the fallout if things go wrong.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium worries about an additional danger of being vulnerable to extra legal costs.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and practically possible solution".

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

While Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

An initial document 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