Moscow Retaliates at Europe's Scheme to Lend Immobilized Russian Assets to Ukraine

Ukraine is facing a severe shortage of financial resources to sustain its military and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Ukraine's budget hole of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

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

'Just' to Use Russia's Assets, Say Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to restore what Russia has devastated: The European Commission calls it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself efficiently against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

The EU is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can agree to.

Until now the EU has refrained from touching the frozen capital directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is considered permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to finance a majority of its funding needs.

• Option one is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now largely turned into cash. That funding is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and claims it is confident it has resolved them.

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

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

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not On Board

Belgium is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the fallout if things do not work out.

A typically partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get absolute guarantees for Euroclear."

EU Leaders Facing Strain from All Sides

The situation is urgent, 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 fiscally viable and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are further worries among European figures that the US may want to use Russia's blocked funds for another purpose, as part of its own peace initiative.

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

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