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

Ukraine is depleting its funding to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders hope to sign that off at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Use Moscow's Assets, Assert Kyiv and Brussels

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

Brussels and Kyiv contend that that capital should be used to restore what Russia has devastated: The European Commission refers to it as a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

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

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

Russia's court action was foreseen in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is worried it will be saddled with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Until now the EU has refrained from accessing the principal funds directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed safe as Russia is under sanction 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 compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to secure the capital on the markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in securities but have now mostly turned into cash. That funding is Euroclear property located within the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and says it is convinced it has dealt with them.

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

If 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.

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

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

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things do not work out.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain adequate guarantees for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

The European Union Under Pressure from Every Direction

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most fiscally viable and politically achievable 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be used, there are added concerns 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 said Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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