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

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

In the view of European leaders, the answer to addressing Ukraine's funding gap of €135.7bn for the coming 24 months is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Utilize Moscow's Funds, Say Ukraine and the EU

In total, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has destroyed: Brussels calls it a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against future Russian attacks".

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

Authorities in Brussels is concerned it will be left with an enormous 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 locked in Russia.

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can agree to.

So far the EU has refrained from accessing the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has justified fears and says it is confident it has addressed them.

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

Should Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia targeted 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 immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected 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 Not Yet Satisfied

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being shouldering the fallout if things do not work out.

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

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

While the EU might be able to obtain adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Lenders need to adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to obtain absolute assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and politically achievable 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 subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

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