Moscow Responds at Europe's Plan to Loan Frozen Russian Assets to Kyiv

Kyiv remains running out of funding to sustain its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Use Russia's Assets, Say Kyiv and Brussels

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has destroyed: EU officials calls it a "reparations loan" and has proposed a plan to support 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 destroyed – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to shield itself effectively against any future Russian attacks".

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

The Belgian government is concerned it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time before next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has avoided using the frozen capital directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is considered less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• The first is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were at first held in bonds but have now predominantly been converted into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has justified fears and claims it is assured it has resolved them.

The scheme 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.

If Russia took legal action against 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 by consensus every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure 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.

Why Belgium is Still Not Convinced

The Belgian government is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and worries about being shouldering the fallout if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure adequate assurances for the loan itself, Belgium is concerned about an added risk of being subject to extra legal costs.

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

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

There is no time to lose, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds 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 next. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

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