Russia Hits Back at Europe's Plan to Loan Immobilized Russian Assets to Ukraine

Ukraine is running out of funding to maintain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the answer to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Russian officials warn the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

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

In total, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has devastated: EU officials terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is appropriate 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.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is worried it will be left with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate 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.

Explaining the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can support.

Until now the EU has held off using the principal funds directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as safe as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to furnishing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• One is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now mostly turned into cash. That money is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and says it is confident it has addressed them.

The plan is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and is concerned about being shouldering the consequences if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure adequate assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to follow capital and liquidity requirements and shouldn't make one enormous loan. 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 secure. And if things go wrong it would be up to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to secure water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Every Direction

There is no time to lose, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and practically possible solution".

"It's a matter of destiny for us," warns 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 adamant its money should not be touched, there are added concerns among leaders in Europe that the US may want to employ Russia's immobilized billions 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 aware the US has been talking to Russia about future co-operation.

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