Russia Responds at Europe's Scheme to Loan Frozen Russian Assets to Kyiv

Ukraine is running out of cash to keep going its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to plugging Kyiv's funding gap of €135.7bn for the coming 24 months lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Employ Moscow's Assets, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its funds blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has laid waste to: The European Commission calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself successfully against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is concerned it will be saddled with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain argues 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 given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is working to the wire ahead of next Thursday's summit to finalize a arrangement that Belgium can support.

So far the EU has refrained from touching the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is deemed safe as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options seeking to providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to raise the money on financial markets, backed by the EU budget as a collateral. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly turned into cash. That money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is convinced it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

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

Until now they have had to vote unanimously every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is insistent it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being shouldering the consequences if things go wrong.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

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

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an added risk of being exposed to extra legal costs.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to save Euroclear. That's another reason why it's so important for Belgium to obtain absolute protections for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, warn 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 "a fiscally viable and practically possible solution".

"It is a decisive moment 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 finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's blocked funds differently, as part of its own peace plan.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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