Russia Responds at the EU's Proposal to Lend Immobilized Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Use Russia's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to restore what Russia has laid waste to: Brussels refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself efficiently against future Russian attacks".

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

Belgium is anxious it will be burdened by an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

Brussels is under pressure ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has refrained from using the principal funds directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as safe as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans designed to supplying Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to borrow the funds on the markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now largely matured into cash. That capital is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is convinced it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted 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 for the foreseeable future.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a ongoing 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 financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is insistent it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things do not work out.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure absolute guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the fiscally viable and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are additional apprehensions among EU officials 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 reconstruction fund, but he is also mindful the US has been engaging with Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving