Russia Hits Back at the EU's Scheme to Loan Frozen Moscow's Assets to Ukraine
Ukraine is facing a severe shortage of funding to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.
In the view of European leaders, the solution to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.
Russian officials caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.
'Appropriate' to Use Russia's Assets, Assert Kyiv and Brussels
All told, Russia has approximately €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.
Brussels and Kyiv argue that money should be used to reconstruct what Russia has destroyed: Brussels terms it a "reconstruction loan" and has proposed a plan to support Ukraine's economy valued at €90bn.
"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.
Germany's leader Friedrich Merz states the assets will "help Ukraine to shield itself successfully against future Russian attacks".
Russia's court action was expected in Brussels. But it is not just Moscow that is unhappy.
Authorities in Brussels is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the world's financial order".
Euroclear also has an roughly €16-17bn frozen in Russia.
Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.
Explaining the EU's Plan?
Brussels is under pressure prior to next Thursday's summit to come up with a compromise that Belgium can accept.
Until now the EU has avoided using the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered less risky as Russia is under sanction and the proceeds are not Russian sovereign property.
But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.
There are presently two EU options designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.
- One is to raise the money on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be problematic 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 initially held in bonds but have now largely matured into cash. That funding is Euroclear property located within the European Central Bank.
The European Commission recognizes Belgium has valid worries and states it is assured it has dealt with them.
The plan is for Belgium to be safeguarded with a assurance applying to all the €210bn of Russian assets in the EU.
If 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 targeted 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 freeze indefinitely Russia's central bank assets held in Europe permanently.
Heretofore they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium.
The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.
Why Belgium is Still Not On Board
The Belgian government is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being left to handle the fallout if things do not work out.
A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.
"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.
While the EU might be able to arrange adequate protections for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.
Prof Colaert also believes the stipulation for Euroclear to provide a loan to the EU would violate EU banking regulations.
"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.
"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to get absolute assurances for Euroclear."
EU Leaders Facing Strain from Every Direction
The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically realistic solution".
"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".
While Russia is insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions for another purpose, as part of its own diplomatic proposal.
Zelensky has said Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.
An early draft of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving
