Moscow Responds at the EU's Scheme to Loan Immobilized Russian Assets to Kyiv

Ukraine is depleting its cash to maintain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to plugging Kyiv's financial shortfall of €135.7bn for the next two years rests with frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials aim to sign that off at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

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

All told, Russia has roughly €210bn of its state reserves frozen 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: Brussels terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself effectively against subsequent Russian attacks".

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

Belgium is anxious it will be burdened by an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has avoided touching the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as less risky as Russia is sanctioned and the returns are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to finance a large portion of its financial requirements.

• One is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is assured it has resolved them.

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

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

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

Why Belgium is Remains Convinced

Brussels is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things fail.

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

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine if it would need to shoulder 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 added risk of being vulnerable to extra legal costs.

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

"Financial institutions need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad assurances for Euroclear."

Europe Facing Strain from Multiple Fronts

There is no time to lose, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"This is a crucial test for us," warns 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 succeed in a week's time".

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

Zelensky has stated Ukraine is in discussions 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 early draft of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving