Moscow Responds at the EU's Scheme to Lend Frozen Russian Assets to Ukraine

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

From the EU's perspective, the remedy to plugging Ukraine's budget hole of €135.7bn for the coming 24 months lies in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Employ Moscow's Funds, Argue Ukraine and the EU

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

European and Ukrainian authorities contend that money should be used to reconstruct what Russia has devastated: Brussels refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

The EU is under pressure before next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has refrained from touching the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as safe as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options seeking to providing Ukraine with €90bn, to cover a large portion of its funding needs.

• Option one 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 challenging when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly turned into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission recognizes Belgium has valid worries and claims it is assured it has dealt with them.

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

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

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

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

Why Belgium is Remains On Board

Belgium is insistent it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things do not work out.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

While the EU might be able to obtain enough protections for the loan itself, Belgium fears an added risk of being exposed to extra damages or penalties.

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

"Lenders need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

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

EU Leaders In a Difficult Position from Multiple Fronts

Time is of the essence, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the economically realistic and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be used, there are additional apprehensions among European figures that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about future co-operation.

An early draft of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving