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

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Russia's Assets, Argue European and Ukrainian Officials

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

European and Ukrainian authorities argue that that capital should be used to restore what Russia has destroyed: Brussels terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the international financial system".

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

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

What is the EU's Plan?

European Union officials is racing against time ahead of next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has held off using the principal funds directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is seen as safe as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on capital markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is confident it has addressed them.

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

Should 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.

Should Russia went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote all together every six months to extend 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 stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is adamant it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the consequences if things do not work out.

A normally fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain enough assurances for the loan itself, Belgium worries about an further exposure of being subject to extra fines or liabilities.

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

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just 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 bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure ironclad assurances for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be touched, there are further worries among EU officials that the US may want to use Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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