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

Ukraine is facing a severe shortage of funding to keep going its military and economy, after nearly four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Utilize Russia's Assets, Argue European and Ukrainian Officials

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

European and Ukrainian authorities argue that that capital should be used to reconstruct what Russia has devastated: Brussels refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is concerned it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with 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 "presents significant risks" for his country.

Explaining the EU's Strategy?

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

Until now the EU has avoided accessing the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed permissible as Russia is sanctioned and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options seeking to providing Ukraine with €90bn, to finance a large portion of its financial requirements.

• One is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has valid worries and says it is assured it has resolved them.

The proposal is for Belgium to be protected with a guarantee 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.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an extraordinary measure 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 Remains Satisfied

Belgium is adamant it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the consequences if things go wrong.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

While the EU might be able to secure enough protections for the loan itself, Belgium worries about an additional danger of being subject to extra legal costs.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would fall to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to get ironclad assurances for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and politically realistic solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to succeed 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 use Russia's immobilized billions differently, as part of its own peace initiative.

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

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