Moscow Retaliates at Europe's Scheme to Loan Immobilized Moscow's Assets to Kyiv

Kyiv remains running out of financial resources to keep going its armed forces and economy, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the next two years lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their meeting in Brussels next week.

Russian officials warn the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Moscow's Assets, Assert Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to restore what Russia has destroyed: EU officials refers to it as a "loan for reparations" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is concerned it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the world's financial order".

Euroclear also has an estimated €16-17bn immobilised 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 "carries significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time ahead of next Thursday's summit to come up with a arrangement that Belgium can accept.

So far the EU has refrained from using the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is deemed less risky as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to furnishing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now predominantly been converted into cash. That money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and claims it is convinced it has resolved them.

The plan is for Belgium to be shielded with a guarantee encompassing all the €210bn of Russian assets in the EU.

Should 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.

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

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

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Remains On Board

Belgium is adamant it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and fears being shouldering the repercussions if things do not work out.

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

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium fears an further exposure of being exposed to extra fines or liabilities.

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

"Lenders need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

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

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

While Russia is unyielding its money should not be touched, there are added concerns among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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