Moscow Retaliates at Europe's Proposal to Lend Frozen Moscow's Assets to Kyiv

Kyiv remains depleting its cash to sustain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels hope to finalize the plan at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Use Russia's Assets, Say Ukraine and the EU

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

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has destroyed: EU officials terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

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

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is concerned it will be saddled with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is under pressure ahead of next Thursday's summit to agree on a compromise that Belgium can agree to.

So far the EU has avoided touching the frozen capital directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered permissible as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to secure the capital on capital markets, secured against the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now largely matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has justified fears and claims it is convinced it has addressed them.

The proposal is for Belgium to be shielded with a guarantee applying to all the €210bn of Russian assets in the EU.

Should Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the fallout if things do not work out.

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

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an added risk of being subject to extra legal costs.

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

"Lenders need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad assurances for Euroclear."

The European Union Facing Strain from Every Direction

There is no time to lose, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the fiscally viable and politically realistic solution".

"This is a crucial test for us," warns 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 finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are further worries among EU officials that the US may want to use Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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