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

Ukraine is depleting its financial resources to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the solution to filling Kyiv's budget hole of €135.7bn for the coming 24 months is found 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.

Moscow's representatives state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Utilize Russia's Assets, Argue Kyiv and Brussels

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

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself successfully against any future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is unhappy.

Belgium is anxious it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

The EU is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has held off touching the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is deemed permissible as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• The first is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly been converted into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

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

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

In a key development, EU ambassadors are poised to endorse 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 renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is insistent it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the fallout if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra legal costs.

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

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to get absolute protections for Euroclear."

EU Leaders Under Pressure from All Sides

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 "a economically realistic and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant 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 in another way, as part of its own peace plan.

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

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