Russia Responds at the EU's Proposal to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains depleting its financial resources to maintain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to addressing Kyiv's funding gap of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Use Moscow's Funds, Assert Kyiv and Brussels

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

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has devastated: EU officials refers to it as a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself efficiently against subsequent Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the international financial system".

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

The leader of Belgium 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 "presents significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has refrained from touching the principal funds directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is deemed less risky as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly matured into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and says it is convinced it has dealt with them.

The scheme is for Belgium to be safeguarded with a guarantee 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 expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

Belgium is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and fears being forced to deal with the repercussions if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

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

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain absolute assurances for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

The situation is urgent, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and politically achievable 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 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 additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating 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 early draft of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving