Russia Hits Back at the EU's Proposal to Lend Frozen Moscow's Assets to Kyiv

Ukraine is depleting its financial resources to maintain its military and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's funding gap of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Russian officials 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 ahead of a definitive agreement is made.

'Just' to Employ Moscow's Assets, Assert European and Ukrainian Officials

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has destroyed: EU officials refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to shield itself effectively against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be burdened by an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

The EU is under pressure prior to next Thursday's summit to come up with a arrangement that Belgium can accept.

So far the EU has avoided accessing the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• The first is to secure the capital on the markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now mostly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is convinced it has addressed them.

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

Should Euroclear suffer a loss 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.

If Russia targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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 planning to use an extraordinary measure 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 Not Yet Convinced

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

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

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

Although the EU might be able to secure sufficient protections for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

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

"Banks need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these banking laws? 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 an additional reason why it's so vital for Belgium to obtain absolute assurances for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a economically realistic and politically realistic solution".

"It is a decisive moment for us," warns 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to employ Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

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

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