Moscow Hits Back at the EU's Scheme to Loan Frozen Russian Assets to Ukraine

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the solution to plugging Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Moscow's Funds, Assert Ukraine and the EU

In total, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that those funds should be used to rebuild what Russia has destroyed: The European Commission refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not only Moscow that is concerned.

Belgium is worried it will be left with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

The EU is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can agree to.

Until now the EU has refrained from touching the principal funds directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is considered safe as Russia is under sanction and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to make up the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at supplying Ukraine with €90bn, to cover a large portion of its funding needs.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now largely been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

The plan is for Belgium to be shielded with a assurance covering 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 settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the repercussions if things go wrong.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an further exposure of being vulnerable 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.

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad protections for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about future co-operation.

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