Moscow Hits Back at Europe's Scheme to Loan Immobilized Moscow's Assets to Kyiv

Kyiv remains facing a severe shortage of cash to sustain its military and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Employ Moscow's Funds, Assert Kyiv and Brussels

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

Brussels and Kyiv contend that those funds should be used to rebuild what Russia has laid waste to: EU officials calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is unhappy.

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

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is working to the wire prior to next Thursday's summit to finalize a compromise that Belgium can support.

Until now the EU has refrained from using 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 profits is considered permissible as Russia is sanctioned and the returns are not property of the Russian state.

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

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

• The first is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely turned into cash. That funding is Euroclear property deposited at the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

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

Should 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.

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

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being left to handle the consequences if things do not work out.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure absolute assurances for Euroclear."

The European Union In a Difficult Position from Every Direction

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and politically achievable solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be accessed, there are further worries among European figures that the US may want to use Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery 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 referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving