Russia Hits Back at the EU's Scheme to Loan Frozen Russian Assets to Ukraine

Ukraine is depleting its cash to sustain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months lies in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Utilize Russia's Assets, Assert Ukraine and the EU

All told, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that those funds should be used to rebuild what Russia has devastated: Brussels refers to it as a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

Belgium is anxious it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

Brussels is working to the wire ahead of next Thursday's summit to come up with a compromise that Belgium can agree to.

Until now the EU has held off using the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is deemed safe as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and claims it is assured it has addressed them.

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

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

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the repercussions if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

While the EU might be able to arrange adequate protections for the loan itself, Belgium fears an additional danger of being exposed to extra fines or liabilities.

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

"Lenders need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so important for Belgium to get ironclad protections for Euroclear."

The European Union Facing Strain from All Sides

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

"It's a matter of destiny for us," says 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 insistent its money should not be touched, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating 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 blocked funds being used by the US for reconstruction, with the US {taking|receiving