Russia Retaliates at Europe's Plan to Loan Immobilized Moscow's Assets to Kyiv

Kyiv remains running out of funding to keep going its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to filling Kyiv's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to finalize the plan at their Brussels summit next week.

Russian officials caution 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 ahead of a definitive agreement is made.

'Only Fair' to Employ Russia's Funds, Say Kyiv and Brussels

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

European and Ukrainian authorities maintain that money should be used to restore what Russia has devastated: EU officials calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

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

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM 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 left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

The EU is racing against time ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

Previously the EU has held off touching the assets themselves directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is deemed less risky as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• One is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be problematic when two member states 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 at first held in bonds but have now mostly been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is convinced it has dealt with them.

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

If 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.

If Russia targeted 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 permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning 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 Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the repercussions if things go wrong.

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

"Belgium is a small economy. Belgian GDP is around €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange enough guarantees for the loan itself, Belgium worries about an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad protections for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a financially feasible and practically possible solution".

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

Although Russia is unyielding its money should not be touched, there are additional apprehensions among EU officials that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

An early draft 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