Russia Responds at Europe's Plan to Lend Frozen Russian Assets to Kyiv

Kyiv remains facing a severe shortage of cash to keep going its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Utilize Moscow's Funds, Argue Kyiv and Brussels

In total, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that those funds should be used to reconstruct what Russia has devastated: The European Commission calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

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

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

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

The Belgian government is anxious 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 global financial architecture".

Euroclear also has an roughly €16-17bn frozen in Russia.

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

Brussels is under pressure before next Thursday's summit to come up with a arrangement that Belgium can accept.

Previously the EU has avoided touching the frozen capital directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options aimed at providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to raise the money on financial markets, backed by the EU budget as a collateral. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now mostly been converted into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is convinced 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.

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house 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 enforced 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 indefinitely.

Until now they have had to vote by consensus every six months to renew 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 remain frozen as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the fallout if things do not work out.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to secure sufficient guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra damages or penalties.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to get water-tight protections for Euroclear."

The European Union Facing Strain from Every Direction

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 scheme involving immobilized capital is "the financially feasible and politically realistic solution".

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

While Russia is adamant its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's immobilized 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 recovery fund, but he is also mindful the US has been talking to Russia about possible partnership.

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