Moscow Hits Back at Europe's Plan to Lend Immobilized Russian Assets to Kyiv

Kyiv remains facing a severe shortage of funding to sustain its armed forces and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Kyiv's budget hole of €135.7bn for the coming 24 months lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels seek to sign that off at their meeting in Brussels 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 ahead of a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Argue Kyiv and Brussels

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

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

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

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against future Russian attacks".

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

The Belgian government is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is racing against time before next Thursday's summit to come up with a arrangement that Belgium can accept.

So far the EU has refrained from touching the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options aimed at supplying Ukraine with €90bn, to finance a large portion of its financial requirements.

• Option one is to raise the money on financial markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now predominantly been converted into cash. That money is Euroclear property located within the European Central Bank.

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

The scheme is for Belgium to be protected with a insurance applying to all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit 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 targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously 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 planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Brussels is insistent it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things go wrong.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an further exposure of being exposed to extra legal costs.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a economically realistic and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be touched, there are further worries among EU officials that the US may want to use Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about future co-operation.

An initial document of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving