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

Kyiv remains depleting its financial resources to keep going its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia state the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Funds, Assert European and Ukrainian Officials

In total, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

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

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

Belgium is concerned it will be burdened by an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

So far the EU has avoided accessing the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is seen as safe as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• The first is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely turned into cash. That capital is owned by Euroclear located within the European Central Bank.

The EU's executive accepts Belgium has valid worries and claims it is confident it has resolved them.

The plan is for Belgium to be safeguarded with a guarantee covering all the €210bn of Russian assets in the EU.

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered 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 accepted 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.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet On Board

Belgium is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being shouldering the fallout if things go wrong.

A usually fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also believes the stipulation for Euroclear to provide a loan to the EU would contravene EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure ironclad guarantees for Euroclear."

Europe Under Pressure from All Sides

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most economically realistic and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among European figures that the US may want to use Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions 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 suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving