Moscow Responds at the EU's Plan to Lend Frozen Russian Assets to Kyiv

Kyiv remains depleting its financial resources to keep going its armed forces and economy, after almost four years of full-scale conflict with Russia.

For Europe, the answer to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

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

In total, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that that capital should be used to restore what Russia has laid waste to: Brussels calls it a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself efficiently against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be burdened by an huge bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has avoided touching the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed safe as Russia is sanctioned and the returns are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at providing Ukraine with €90bn, to finance a large portion of its budgetary necessities.

• Option one is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in securities but have now mostly been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia targeted Belgium itself, any decision 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 renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set 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 financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

Brussels is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the repercussions if things do not work out.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider 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 sufficient protections for the loan itself, Belgium worries about an further exposure of being subject to extra legal costs.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so important for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from All Sides

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and practically possible solution".

"It's a matter of destiny for us," warns 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 reach an agreement in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction 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