Moscow Hits Back at Europe's Plan to Loan Frozen Russian Assets to Ukraine

Ukraine is running out of funding to maintain its military and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the solution to plugging Ukraine's funding gap of €135.7bn for the next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Russia's Funds, Assert Ukraine and the EU

All told, Russia has approximately €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that that capital should be used to restore what Russia has destroyed: The European Commission refers to it as a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be burdened by an enormous bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has set the EU 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 "poses significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire before next Thursday's summit to finalize a arrangement that Belgium can accept.

Until now the EU has refrained from using the frozen capital directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to cover a majority of its funding needs.

• One is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has valid worries and claims it is assured it has resolved them.

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

Should Euroclear face a financial hit 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 targeted Belgium itself, any ruling by a Russian court would not be enforced 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 permanently.

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

The EU ambassadors are expected to use an special provision 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 insistent it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and worries about being left to handle the consequences if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

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

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

"Financial institutions need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to secure absolute guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

Time is of the essence, warn seven 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 practically possible 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 next. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries 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 stated 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 possible partnership.

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