Russia Retaliates at Europe's Proposal to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains depleting its cash to maintain its military and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the remedy to addressing Ukraine's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv contend that money 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 amounting to €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to defend itself efficiently against any future Russian attacks".

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

Belgium is anxious it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "undermine 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 "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

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

Until now the EU has refrained from touching the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is considered less risky as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to furnishing Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly been converted into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and says it is confident it has resolved them.

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

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set 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 economic interests of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is insistent it remains a strong supporter of Ukraine, but identifies legal risks in the plan and is concerned about being shouldering the consequences 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 fellow EU leaders.

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

While the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the economically realistic and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are added concerns among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving