Moscow Responds at Europe's Proposal to Loan Immobilized Moscow's Assets to Kyiv

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

From the EU's perspective, the solution to plugging Kyiv's budget hole of €135.7bn for the next two years rests with frozen Russian assets located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Russia's Funds, Say Kyiv and Brussels

Overall, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv maintain that money should be used to rebuild what Russia has devastated: The European Commission terms it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can accept.

Until now the EU has avoided accessing the assets themselves directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

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

• Option one is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in bonds but have now largely matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and claims it is assured it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

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

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore 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 set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the consequences if things fail.

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

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

Although the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

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

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

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

Europe In a Difficult Position from All Sides

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the economically realistic and politically achievable solution".

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

Although Russia is insistent its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace plan.

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

A preliminary version 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