Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Assets to Ukraine

Kyiv remains facing a severe shortage of financial resources to sustain its military and economy, after almost four years of Russia's full-scale war.

For Europe, the answer to plugging Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to sign that off at their EU leaders' conference next week.

Russian officials warn the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Argue Kyiv and Brussels

Overall, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that that capital should be used to restore what Russia has destroyed: The European Commission terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself successfully against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

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

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

Belgium's PM 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 "carries significant risks" for his country.

The Details of the EU's Proposal?

Brussels is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has refrained from touching the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to furnishing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now largely turned into cash. That capital is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

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

Should Euroclear suffer a loss 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.

If Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing 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 "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet On Board

The Belgian government is adamant it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the repercussions if things do not work out.

A normally fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to obtain enough guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing 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 rescue Euroclear. That's a further cause why it's so crucial for Belgium to get absolute assurances for Euroclear."

EU Leaders Facing Strain from All Sides

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the fiscally viable and politically realistic solution".

"It's a matter of destiny for us," warns 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".

Although Russia is unyielding its money should not be used, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds in another way, as part of its own peace initiative.

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

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