Russia Hits Back at the EU's Scheme to Loan Immobilized Russian Assets to Kyiv

Ukraine is facing a severe shortage of funding to keep going its military and economy afloat, after nearly four years of Russia's full-scale war.

From the EU's perspective, the answer to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Use Russia's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: EU officials terms it a "reconstruction loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to defend itself effectively against any future Russian attacks".

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

Belgium is worried it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM 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 refused to rule out legal action if it "poses 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 solution that Belgium can agree to.

Previously the EU has refrained from accessing the frozen capital directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered less risky as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to supplying Ukraine with €90bn, to pay for a majority of its financial requirements.

• Option one is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now predominantly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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.

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

As an important step, EU ambassadors are expected to agree 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 renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an emergency clause 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.

The Reasons Belgium is Remains Convinced

The Belgian government is insistent it remains a strong supporter of Ukraine, but sees legal risks in the plan and fears being shouldering the consequences if things go wrong.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Lenders need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from Every Direction

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible and politically realistic solution".

"It is a decisive moment for us," warns 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 unyielding its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

An initial document 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