Moscow Responds at the EU's Scheme to Lend Immobilized Russian Assets to Ukraine

Kyiv remains facing a severe shortage of funding to maintain its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the following biennium is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Employ Russia's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv maintain that money should be used to rebuild what Russia has laid waste to: Brussels terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz states the assets will "enable Ukraine to protect itself efficiently against subsequent Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with 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?

Brussels is racing against time before next Thursday's summit to agree on a arrangement that Belgium can agree to.

Previously the EU has avoided using the principal funds directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options seeking to furnishing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• One is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now largely turned into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and states it is confident it has resolved them.

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

Should 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 targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning 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.

The Reasons Belgium is Not Yet On Board

Belgium is adamant it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being left to handle the consequences if things fail.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to obtain enough protections for the loan itself, Belgium worries about an further exposure of being subject to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? 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 a further cause why it's so vital for Belgium to obtain ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and politically achievable 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions in another way, 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 aware the US has been talking to Russia about possible partnership.

A preliminary version of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving