Moscow Hits Back at the EU's Scheme to Lend Frozen Moscow's Assets to Ukraine

Ukraine is running out of financial resources to sustain its armed forces and economy, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to addressing Ukraine's funding gap of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels aim to finalize the plan 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 suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv contend that those funds should be used to reconstruct what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz says the assets will "enable Ukraine to protect itself efficiently against subsequent Russian attacks".

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

Belgium is anxious it will be saddled with an enormous bill if it all goes wrong, and Euroclear CEO 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 "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

Brussels is working to the wire before next Thursday's summit to agree on a arrangement that Belgium can support.

Until now the EU has refrained from accessing the frozen capital directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered less risky as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to supplying Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly turned into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is confident it has dealt with them.

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

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

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block 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 constant risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and is concerned about being shouldering the fallout if things go wrong.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

While the EU might be able to obtain enough guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

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

"Financial institutions need to follow stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get absolute protections for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries 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 indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

An initial document of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving