Moscow Hits Back at the EU's Proposal to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy, after nearly four years of Russia's full-scale war.

For Europe, the answer to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with frozen Russian assets held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

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

In total, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that those funds should be used to restore what Russia has devastated: Brussels refers to it as a "reconstruction loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to defend itself successfully against any future Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has refrained from accessing the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as less risky as Russia is under sanction and the returns are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to furnishing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• One is to secure the capital on the markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely matured into cash. That capital is Euroclear property located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is confident it has resolved them.

The scheme is for Belgium to be shielded 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, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

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

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things fail.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to secure enough protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra damages or penalties.

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

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

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain ironclad guarantees for Euroclear."

The European Union Under Pressure from All Sides

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and practically possible solution".

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

While Russia is adamant its money should not be used, there are further worries among EU officials that the US may want to deploy Russia's frozen billions in another way, as part of its own peace plan.

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

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