Russia Retaliates at the EU's Plan to Lend Frozen Moscow's Assets to Ukraine

Ukraine is running out of funding to keep going its military and economy, after close to 48 months of full-scale conflict with Russia.

For Europe, the solution 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 Brussels aim to finalize the plan at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

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

All told, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv contend that that capital should be used to reconstruct what Russia has devastated: Brussels calls it a "reparations 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 that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself efficiently against subsequent Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be left with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

Euroclear also has an approximate €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 agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

The EU is working to the wire before next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has avoided accessing the frozen capital directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered less risky as Russia is under sanction and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly matured into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has valid worries and claims it is convinced it has dealt with them.

The plan is for Belgium to be protected with a guarantee 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 settlement agency which are in the EU.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Until now they have had to vote all together every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an special provision 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.

Why Belgium is Still Not On Board

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being left to handle the consequences if things fail.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

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

"Lenders need to adhere to prudential rules 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 stable. And if things fail it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure ironclad protections for Euroclear."

The European Union Facing Strain from Multiple Fronts

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 accessed, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about future co-operation.

An early draft of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving