Russia Responds at Europe's Scheme to Lend Frozen Russian Assets to Kyiv

Kyiv remains depleting its cash to maintain its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to addressing Ukraine's budget hole of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Just' to Use Moscow's Assets, Argue European and Ukrainian Officials

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

The EU and Ukraine maintain that that capital should be used to rebuild what Russia has destroyed: EU officials terms it a "reparations loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is worried it will be left with 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 locked in Russia.

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to agree on a compromise that Belgium can agree to.

Until now the EU has avoided accessing the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is deemed less risky as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to finance a large portion of its financial requirements.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is assured it has dealt with them.

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

If Euroclear suffer a loss 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 took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels 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 repercussions if things do not work out.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't concentrate risk. 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 go wrong it would be up to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and politically realistic solution".

"This is a crucial test 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 reach an agreement in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among European figures that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about possible partnership.

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