Russia Hits Back at Europe's Scheme to Loan Frozen Russian Assets to Kyiv

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

For Europe, the answer to addressing Kyiv's funding gap of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels seek to sign that off at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Employ Moscow's Assets, Argue Ukraine and the EU

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

The EU and Ukraine contend that that capital should be used to restore what Russia has devastated: Brussels calls it a "reconstruction loan" and has proposed 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 reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to defend itself effectively against subsequent Russian attacks".

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

Belgium is anxious it will be burdened by an huge bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to come up with a solution that Belgium can accept.

Previously the EU has avoided using the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is deemed permissible as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• Option one is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now mostly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and says it is convinced it has addressed them.

The scheme is for Belgium to be safeguarded with a insurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit 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.

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

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

Previously they have had to vote unanimously every six months to continue 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 "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Brussels is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and worries about being left to handle the repercussions if things fail.

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

"The Belgian economy is not large. Belgian GDP is approximately €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 secure adequate protections for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

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

"Banks need to adhere to 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 bank rules? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure absolute guarantees for Euroclear."

EU Leaders Facing Strain from All Sides

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a economically realistic and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be used, there are further worries 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 stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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