Moscow Hits Back at the EU's Proposal to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains running out of funding to maintain its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Ukraine's budget hole of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Use Moscow's Assets, Assert Ukraine and the EU

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

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has destroyed: The European Commission calls it a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself efficiently against future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with 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 Proposal?

Brussels is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has held off accessing the frozen capital directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed permissible as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on financial markets, backed 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 Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now predominantly matured into cash. That capital is owned by Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is convinced it has resolved them.

The scheme is for Belgium to be protected with a insurance 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 clearing house 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 accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is adamant it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the repercussions if things fail.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute protections for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," says 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 finalize the deal in a week's time".

While Russia is insistent its money should not be used, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about future co-operation.

A preliminary version 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