Russia Responds at the EU's Plan to Lend Immobilized Russian Assets to Ukraine

Kyiv remains depleting its funding to sustain its military and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the remedy to filling Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

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

'Only Fair' to Employ Moscow's Assets, Say Ukraine and the EU

All told, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself efficiently against subsequent Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is worried it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

European Union officials is under pressure before next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has refrained from touching the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is considered permissible as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• One is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now predominantly matured into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and says it is convinced it has addressed them.

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

Should Euroclear incur losses 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 went after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and is concerned about being shouldering the consequences if things go wrong.

A usually partisan political environment 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 bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra legal costs.

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

"Banks need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"Why do we have 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 bail out Euroclear. That's another reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most fiscally viable and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among European figures that the US may want to use Russia's blocked funds for another purpose, 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 possible partnership.

A preliminary version 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