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

Kyiv remains facing a severe shortage of cash to sustain its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the answer to plugging Ukraine's budget hole of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

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

All told, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has destroyed: Brussels refers to it as a "reparations loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to defend itself effectively against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is worried it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time prior to next Thursday's summit to agree on a arrangement that Belgium can agree to.

Previously the EU has avoided using the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as safe as Russia is under sanction and the earnings are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a consensus by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has justified fears and says it is convinced it has addressed them.

The scheme is for Belgium to be safeguarded with a assurance applying to 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 clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated 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 "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is adamant it remains a committed partner of Ukraine, but sees legal risks in the plan and is concerned about being shouldering the repercussions if things fail.

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

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an added risk of being vulnerable to extra damages or penalties.

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

"Financial institutions need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to get absolute guarantees for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable and politically achievable solution".

"This is a crucial test 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 succeed in a week's time".

While Russia is unyielding its money should not be touched, there are further worries among leaders in Europe that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace plan.

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

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