Moscow Retaliates at Europe's Proposal to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of cash to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

For Europe, the answer to filling Kyiv's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Use Moscow's Funds, Say Ukraine and the EU

All told, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that that capital should be used to restore what Russia has laid waste to: Brussels calls it a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct 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 efficiently against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order".

Euroclear also has an roughly €16-17bn frozen 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 reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

European Union officials is working to the wire prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has held off using the principal funds directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as less risky as Russia is under sanction and the earnings are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now mostly been converted into cash. That capital is Euroclear property located within the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and states it is confident it has resolved them.

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

If 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.

Should Russia went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

Why Belgium is Not Yet On Board

Belgium is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the fallout if things go wrong.

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

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange adequate protections for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

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

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

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to obtain ironclad guarantees for Euroclear."

The European Union Facing Strain from All Sides

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

"This is a crucial test for us," states 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 succeed in a week's time".

While Russia is adamant its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

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

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