Moscow Hits Back at Europe's Proposal to Loan Immobilized Russian Assets to Kyiv

Kyiv remains running out of cash to keep going its military and economy, after close to 48 months of full-scale conflict with Russia.

For Europe, the answer to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

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

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

The EU and Ukraine argue that that capital should be used to restore what Russia has devastated: The European Commission terms it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

Russia's court action was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is worried it will be burdened by an enormous bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with 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 "carries significant risks" for his country.

What is the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Previously the EU has avoided accessing the assets themselves directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as safe as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to supplying Ukraine with €90bn, to pay for a large portion of its financial requirements.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in securities but have now largely been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and says it is assured it has dealt with them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing 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 security of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is firm it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being shouldering the repercussions if things fail.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Banks need to comply with 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 banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad guarantees for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, 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 "the most fiscally viable and politically realistic 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 next. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among EU officials that the US may want to employ Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery 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 mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving