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

Ukraine is running out of cash to maintain its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to addressing Kyiv's funding gap of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to sign that off at their Brussels summit next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Moscow's Assets, Assert Ukraine and the EU

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

European and Ukrainian authorities argue that those funds should be used to rebuild what Russia has devastated: The European Commission calls it a "reconstruction loan" 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 rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself efficiently against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with 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.

Explaining the EU's Proposal?

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

So far the EU has held off accessing the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options seeking to providing Ukraine with €90bn, to cover a large portion of its funding needs.

• One is to borrow the funds on the markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly been converted into cash. That funding is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is assured it has dealt with them.

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to renew the freeze, which could have meant a repeated 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 "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Brussels is insistent it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the repercussions if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an additional danger of being subject to extra legal costs.

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

"Banks need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

Europe In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a financially feasible and practically possible 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 succeed in a week's time".

While Russia is insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to use Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is working 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 suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving