Moscow Responds at Europe's Proposal to Loan Immobilized Russian Assets to Ukraine

Ukraine is running out of funding to maintain its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to plugging Ukraine's budget hole of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to finalize the plan at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Use Moscow's Funds, Argue European and Ukrainian Officials

In total, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that that capital should be used to restore what Russia has devastated: The European Commission refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself effectively against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is concerned.

Belgium is concerned it will be saddled with an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

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

Previously the EU has avoided touching the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered permissible as Russia is under sanction and the proceeds are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to raise the money on financial markets, secured against the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were initially held in bonds but have now largely been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is convinced it has resolved them.

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

If 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.

Should Russia took legal action against 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 permanently block Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote unanimously every six months to renew the freeze, which could have meant a constant 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 "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and fears being shouldering the fallout if things do not work out.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €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 obtain sufficient guarantees for the loan itself, Belgium fears an added risk of being vulnerable to extra legal costs.

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

"Financial institutions need to comply with stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

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

Europe Under Pressure from All Sides

There is no time to lose, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the financially feasible and practically possible solution".

"It's a matter of destiny 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are added concerns among EU officials that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving