Russia Hits Back at Europe's Scheme to Loan Immobilized Russian Assets to Ukraine

Ukraine is running out of financial resources to sustain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Employ Moscow's Assets, Say European and Ukrainian Officials

In total, Russia has about €210bn of its funds blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has destroyed: Brussels calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself successfully against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is anxious it will be left with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgium's PM 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 not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to come up with a solution that Belgium can accept.

Previously the EU has avoided using the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed permissible as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options designed to furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• The first is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is assured it has dealt with them.

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

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an extraordinary measure 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.

Why Belgium is Remains Satisfied

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the repercussions if things fail.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

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

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

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

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

Europe In a Difficult Position from All Sides

Time is of the essence, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most fiscally viable and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. 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 EU officials that the US may want to use Russia's blocked funds differently, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

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