Moscow Responds at Europe's Scheme to Loan Immobilized Russian Assets to Ukraine

Ukraine is facing a severe shortage of funding to keep going its military and economy, after nearly four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's budget hole of €135.7bn for the following biennium is found in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Employ Moscow's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv contend that those funds should be used to rebuild what Russia has devastated: The European Commission terms it a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself effectively against subsequent Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be saddled with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time before next Thursday's summit to come up with a arrangement that Belgium can support.

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

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now largely matured into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is confident it has dealt with them.

The plan is for Belgium to be protected with a insurance applying to 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 clearing house which are in the EU.

Should Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

Previously they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Still Not On Board

Belgium is adamant it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being left to handle the fallout if things do not work out.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

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

While the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to get water-tight assurances for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the economically realistic and politically achievable solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about possible partnership.

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