Moscow Hits Back at Europe's Scheme to Lend Frozen Russian Assets to Ukraine

Kyiv remains facing a severe shortage of cash to sustain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the remedy to filling Ukraine's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine maintain that money should be used to reconstruct what Russia has laid waste to: EU officials calls it a "reparations loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

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

The Belgian government is worried it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to finalize a arrangement that Belgium can accept.

Until now the EU has held off using the frozen capital directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is deemed permissible as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans designed to providing Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly matured into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident it has addressed them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

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

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the fallout if things fail.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to secure adequate assurances for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

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

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to get absolute assurances for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the financially feasible and practically possible 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be touched, there are additional apprehensions among European figures that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is working 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 suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving