Moscow Hits Back at Europe's Plan to Lend Immobilized Russian Funds to Ukraine

Kyiv remains facing a severe shortage of financial resources to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to filling Kyiv's budget hole of €135.7bn for the next two years lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials seek to finalize the plan at their Brussels summit next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Assets, Say European and Ukrainian Officials

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

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has devastated: Brussels calls it a "reparations loan" and has proposed 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 ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

Belgium is concerned it will be burdened by an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

Euroclear also has an approximate €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 Proposal?

Brussels is racing against time ahead of next Thursday's summit to come up with a arrangement that Belgium can agree to.

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

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans designed to supplying Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly turned into cash. That funding is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is convinced it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

If Russia targeted 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 for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause 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 Convinced

Belgium is firm it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being forced to deal with the repercussions if things fail.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain enough assurances for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight assurances for Euroclear."

The European Union In a Difficult Position from Every Direction

There is no time to lose, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the financially feasible and politically achievable 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 insistent its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

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

A preliminary version of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving