Moscow Retaliates at the EU's Plan to Lend Immobilized Moscow's Assets to Ukraine

Kyiv remains depleting its funding to sustain its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to filling Kyiv's budget hole of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels 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 even before a definitive agreement is made.

'Appropriate' to Employ Moscow's Funds, Assert Kyiv and Brussels

Overall, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that those funds should be used to reconstruct what Russia has laid waste to: EU officials calls it a "reparations loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz states the assets will "allow Ukraine to protect itself effectively against future Russian attacks".

Russia's court action was expected in Brussels. But it is not just Moscow that is concerned.

The Belgian government is worried it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept 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?

The EU is under pressure ahead of next Thursday's summit to finalize a compromise that Belgium can accept.

Previously 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. Legally, using the interest is considered permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to pay for a large portion 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 favored solution but it demands a unanimous vote by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now predominantly turned into cash. That capital is Euroclear property located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and claims it is confident it has resolved them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Belgium is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being left to handle the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure enough guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad protections for Euroclear."

The European Union In a Difficult Position from Every Direction

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

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to finalize the deal 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 in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with Russia about potential collaboration.

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