Moscow Responds at the EU's Plan to Lend Frozen Russian Assets to Ukraine

Ukraine is running out of cash to maintain its military and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the remedy to addressing Ukraine's budget hole of €135.7bn for the next two years rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference 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 even before a conclusive plan is made.

'Appropriate' to Employ Russia's Funds, Say Kyiv and Brussels

All told, Russia has approximately €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has devastated: The European Commission terms it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to shield itself efficiently against any future Russian attacks".

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

The Belgian government is worried it will be left with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse 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 Strategy?

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

So far the EU has refrained from accessing the assets themselves directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered less risky as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly been converted into cash. That money is owned by Euroclear deposited at the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is assured it has dealt with them.

The plan is for Belgium to be shielded with a assurance 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 clearing house which are in the EU.

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

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Until now 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 emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

The Belgian government is firm it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and fears being left to handle the repercussions if things go wrong.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute protections for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most fiscally viable and politically achievable solution".

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

While Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

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

An initial document of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving