Russia Retaliates at the EU's Proposal to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is running out of cash to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Russia's Assets, Assert Kyiv and Brussels

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

European and Ukrainian authorities argue that those funds should be used to restore what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has devised a plan to support 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," remarks Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

Belgium is anxious it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

The EU is racing against time before next Thursday's summit to agree on a compromise that Belgium can agree to.

Previously the EU has refrained from touching the assets themselves directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is deemed permissible as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to secure the capital on financial markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were at first held in securities but have now mostly been converted into cash. That money is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is convinced it has dealt with them.

The plan is for Belgium to be safeguarded with a insurance 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 clearing house which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote all together every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not On Board

Brussels is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and worries about being left to handle the consequences if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient guarantees for the loan itself, Belgium fears an further exposure of being vulnerable to extra legal costs.

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

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most fiscally viable and politically achievable solution".

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

While Russia is adamant its money should not be accessed, there are added concerns among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace initiative.

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

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving