Russia Hits Back at the EU's Scheme to Lend Frozen Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of funding to sustain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to filling Ukraine's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

The EU and Ukraine argue that money should be used to restore what Russia has devastated: Brussels refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself efficiently against any future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can support.

Previously the EU has held off accessing the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is considered less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to providing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now predominantly matured into cash. That capital is Euroclear property held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims it is confident it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to extend the freeze, which could have meant a ongoing 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 "immediate threat to the financial well-being of the union" continues.

Why Belgium is Not Yet On Board

Belgium is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and worries about being left to handle the fallout if things fail.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an additional danger of being vulnerable to extra damages or penalties.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

EU Leaders Under Pressure from All Sides

The situation is urgent, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a fiscally viable and politically achievable solution".

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

Although Russia is insistent its money should not be accessed, there are further worries among European figures that the US may want to employ Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving