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

Kyiv remains facing a severe shortage of funding to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the answer to filling Kyiv's budget hole of €135.7bn for the coming 24 months lies in frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

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

All told, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "help Ukraine to protect itself successfully against any future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an enormous bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse 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 working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided accessing the principal funds directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is considered safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is convinced it has resolved them.

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

If 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.

Should Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized 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 by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set 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 financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being left to handle the consequences if things do not work out.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €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 obtain sufficient protections for the loan itself, Belgium fears an further exposure of being exposed to extra legal costs.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to secure water-tight guarantees for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a economically realistic and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized billions in another way, 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 mindful the US has been engaging with Russia about future co-operation.

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