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

Kyiv remains depleting its cash to keep going its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to plugging Kyiv's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to sign that off at their EU leaders' conference next week.

Russian officials caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Employ Moscow's Assets, Argue Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to reconstruct what Russia has destroyed: Brussels calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against any future Russian attacks".

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

The Belgian government is worried it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is working to the wire prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has held off accessing the frozen capital directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is seen as permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

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

• The first is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely turned into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is confident it has addressed them.

The scheme is for Belgium to be safeguarded with a assurance applying to all the €210bn of Russian assets in the EU.

If Euroclear incur losses 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.

In the event that Russia took legal action against Belgium itself, any judgment 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 indefinitely.

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains On Board

Belgium is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and is concerned about being shouldering the repercussions if things go wrong.

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

"Belgium has a modest-sized economy. Belgian GDP is around €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 arrange adequate guarantees for the loan itself, Belgium is concerned about an further exposure of being exposed to extra damages or penalties.

Prof Colaert also argues the stipulation for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get water-tight protections for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the economically realistic and practically possible 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 succeed in a week's time".

While Russia is insistent its money should not be used, there are added concerns among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a recovery 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving