Moscow Hits Back at the EU's Scheme to Loan Immobilized Russian Assets to Kyiv

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

In the view of European leaders, the answer to filling Kyiv's budget hole of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to sign that off at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Use Russia's Funds, Assert European and Ukrainian Officials

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

The EU and Ukraine contend that money should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to shield itself efficiently against any future Russian attacks".

Russia's court action was expected in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is anxious it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise 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 agree to the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

So far the EU has refrained from touching the frozen capital directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible 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 found it difficult to compensate for the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to furnishing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• One is to borrow the funds on the markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in bonds but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and says it is assured it has resolved them.

The proposal is for Belgium to be protected 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.

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

As an important step, EU ambassadors are expected to agree on Friday to permanently block 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 extend the freeze, which could have meant a constant 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 interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things go wrong.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure sufficient guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

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

"Lenders need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain water-tight assurances for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most fiscally viable and politically realistic 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 next. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to 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