Moscow Hits Back at the EU's Plan to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is facing a severe shortage of funding to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

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

'Just' to Use Russia's Funds, Assert Ukraine and the EU

All told, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities argue that money should be used to reconstruct what Russia has devastated: Brussels refers to it as a "loan for reparations" and has come up with 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 those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself effectively against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels 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 "presents significant risks" for his country.

The Details of the EU's Strategy?

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

Until now the EU has held off accessing the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed permissible as Russia is sanctioned and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• Option one is to secure the capital on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it needs a consensus by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly turned into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and claims it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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 took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet Convinced

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the repercussions if things fail.

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

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient assurances 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 grant a loan to the EU would violate EU banking regulations.

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. 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 solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to get ironclad guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the economically realistic and practically possible solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. 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 additional apprehensions among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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