Moscow Retaliates at the EU's Plan to Lend Frozen Russian Assets to Kyiv

Kyiv remains running out of funding to maintain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Moscow's Funds, Assert European and Ukrainian Officials

Overall, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that money should be used to restore what Russia has destroyed: 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 Russia's frozen assets should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

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

What is the EU's Plan?

Brussels is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has held off touching the assets themselves directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered permissible as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options designed to supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to borrow the funds on financial markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is providing a loan of 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 Euroclear property deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and says it is assured it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a constant 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 "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the fallout if things go wrong.

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

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

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

"Lenders need to comply with stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most economically realistic and politically realistic solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

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

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