Russia Hits Back at Europe's Plan to Loan Frozen Russian Assets to Ukraine

Kyiv remains depleting its financial resources to sustain its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Russian officials caution the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Use Moscow's Funds, Say Ukraine and the EU

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

The EU and Ukraine maintain that that capital should be used to restore what Russia has laid waste to: EU officials calls it a "reparations loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be burdened by an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels 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 "carries significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to finalize a arrangement that Belgium can accept.

Previously the EU has held off touching the principal funds directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is under sanction and the returns are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the gap resulting from 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 cover a majority of its funding needs.

• Option one is to raise the money on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now largely been converted into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is confident it has dealt with them.

The proposal is for Belgium to be protected 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 clearing house which are in the EU.

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

In a key development, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

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

Why Belgium is Still Not Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being left to handle the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is about €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 obtain sufficient protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad assurances for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most financially feasible and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging 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