Moscow Retaliates at Europe's Plan to Lend Frozen Russian Assets to Ukraine

Kyiv remains depleting its funding to sustain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the answer to filling Kyiv's budget hole of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to sign that off at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Use Moscow's Funds, Argue Kyiv and Brussels

All told, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to restore what Russia has devastated: The European Commission refers to it as a "loan for reparations" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is worried it will be left with an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is working to the wire ahead of next Thursday's summit to finalize a solution that Belgium can accept.

Previously the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed permissible as Russia is sanctioned and the returns 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 shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options seeking to supplying Ukraine with €90bn, to cover a majority of its budgetary necessities.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely turned into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and states it is assured it has resolved them.

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

Should 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.

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Until now 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 extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is firm it remains a strong supporter of Ukraine, but sees legal risks in the plan and worries about being forced to deal with the fallout if things go wrong.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing 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," notes Veerle Colaert, professor of financial law at KU Leuven University.

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

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking 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 rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute protections for Euroclear."

EU Leaders In a Difficult Position from Every Direction

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and practically possible solution".

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

Although Russia is unyielding its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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