Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Assets to Kyiv

Kyiv remains depleting its financial resources to sustain its military and economy, after almost four years of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels hope to finalize the plan at their EU leaders' conference next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Utilize Moscow's Assets, Assert Kyiv and Brussels

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

Brussels and Kyiv contend that that capital should be used to restore what Russia has laid waste to: Brussels terms it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

Euroclear also has an roughly €16-17bn locked 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 reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is working to the wire ahead of next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has avoided using the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is considered safe as Russia is subject to sanctions and the earnings are not Russian sovereign property.

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

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

• Option one is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly been converted into cash. That funding is Euroclear property located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and says it is assured it has resolved them.

The plan is for Belgium to be safeguarded with a insurance encompassing 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.

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning 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 Still Not Convinced

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the repercussions if things do not work out.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about 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 secure adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra damages or penalties.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to secure absolute assurances for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and politically achievable solution".

"It's a matter of destiny 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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