Russia Hits Back at Europe's Scheme to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains depleting its cash to sustain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to plugging Ukraine's funding gap of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Utilize Moscow's Funds, Assert Kyiv and Brussels

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

The EU and Ukraine argue that that capital should be used to restore what Russia has destroyed: EU officials calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

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

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

Belgium is worried it will be left with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is working to the wire before next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has held off using the frozen capital directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is considered less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• One is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly been converted into cash. That capital is owned by Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has valid worries and says it is convinced it has resolved them.

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

If Euroclear face a financial hit 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 took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated 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 "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

Brussels is adamant it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being left to handle the consequences if things do not work out.

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

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

Although the EU might be able to obtain adequate protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Financial institutions need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just 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 rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute assurances for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the economically realistic and politically realistic solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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