Russia Responds at Europe's Plan to Loan Immobilized Moscow's Assets to Kyiv

Kyiv remains running out of cash to sustain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to addressing Ukraine's budget hole of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders hope to finalize the plan at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

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

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

European and Ukrainian authorities argue that money should be used to reconstruct what Russia has devastated: EU officials calls it a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is worried it will be burdened by an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "destabilise the international financial system".

Euroclear also has an estimated €16-17bn locked in Russia.

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept 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 Proposal?

The EU is working to the wire ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

So far the EU has refrained from using the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed safe as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

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

There are presently two EU plans seeking to supplying Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were originally held in bonds but have now largely turned into cash. That money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is convinced it has resolved them.

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

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

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

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

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

The EU ambassadors are planning to use an extraordinary measure 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 Convinced

Brussels is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the fallout if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an added risk of being subject to extra legal costs.

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

"Lenders need to comply with prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

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

The European Union In a Difficult Position from Every Direction

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a economically realistic and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be used, there are added concerns among EU officials that the US may want to deploy Russia's immobilized billions differently, as part of its own peace plan.

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

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