Russia Hits Back at Europe's Plan to Lend Immobilized Russian Assets to Kyiv

Ukraine is depleting its financial resources to maintain its military and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to plugging Ukraine's funding gap of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their Brussels summit next week.

Russian officials caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Russia's Assets, Say European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to reconstruct what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has devised 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," remarks Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

The Belgian government is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure ahead of next Thursday's summit to finalize a compromise that Belgium can agree to.

So far the EU has avoided accessing the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to secure the capital on capital markets, secured against 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 difficult when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in bonds but have now largely turned into cash. That money is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and says it is assured it has resolved them.

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

If Euroclear face a financial hit 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.

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

In a key development, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is firm it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being forced to deal with the fallout if things do not work out.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an added risk of being subject to extra damages or penalties.

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

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute assurances for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic 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 reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about future co-operation.

A preliminary version 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