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

Ukraine is depleting its financial resources to sustain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to plugging Ukraine's budget hole of €135.7bn for the coming 24 months lies 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.

Moscow's representatives caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Utilize Moscow's Assets, Argue Kyiv and Brussels

In total, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv contend that those funds should be used to reconstruct what Russia has laid waste to: Brussels terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is anxious it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse 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 Proposal?

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

Previously the EU has avoided touching the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is seen as permissible as Russia is subject to sanctions and the earnings 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 shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options seeking to furnishing Ukraine with €90bn, to finance a large portion of its budgetary necessities.

• The first is to borrow the funds on financial markets, backed 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 difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now mostly turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is assured it has resolved them.

The scheme is for Belgium to be protected 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, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia targeted Belgium itself, any ruling by a Russian court would not be recognized 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 permanently.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a constant 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 "clear risk to the economic security of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is insistent it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to obtain enough assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

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

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

"Why do we have these banking laws? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad assurances for Euroclear."

The European Union Under Pressure from Every Direction

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the fiscally viable and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be used, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about possible partnership.

An initial document 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