Moscow Retaliates at Europe's Plan to Loan Immobilized Russian Assets to Ukraine

Ukraine is running out of funding to sustain its armed forces and economy, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the solution to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Utilize Russia's Assets, Assert Kyiv and Brussels

All told, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to reconstruct what Russia has devastated: The European Commission terms it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

Euroclear also has an approximate €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 refused to rule out legal action if it "carries 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 compromise that Belgium can support.

Previously the EU has avoided touching the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is deemed permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• One is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely turned into cash. That funding is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and states it is assured it has resolved them.

The scheme is for Belgium to be protected with a guarantee encompassing 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 clearing house which are in the EU.

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

In a key development, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

Belgium is firm it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being forced to deal with the fallout if things do not work out.

A usually fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – consider 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 secure adequate assurances for the loan itself, Belgium fears an additional danger of being subject to extra fines or liabilities.

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

"Lenders need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so vital for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and practically possible 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 next. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, 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 initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving