Russia Retaliates at the EU's Plan to Loan Frozen Russian Assets to Kyiv

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Authorities in Russia state 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 even before a conclusive plan is made.

'Only Fair' to Use Moscow's Assets, Say European and Ukrainian Officials

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has destroyed: EU officials refers to it as a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

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

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

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

The Belgian government is anxious it will be burdened by an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Until now the EU has refrained from accessing the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is considered safe as Russia is subject to sanctions and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• Option one is to raise the money on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is convinced it has resolved them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset 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 enforced 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 permanently.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains On Board

Belgium is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being left to handle the consequences if things do not work out.

A normally partisan political environment in this case has rallied 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 bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain adequate protections for the loan itself, Belgium fears an added risk of being exposed to extra legal costs.

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Financial institutions need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to get absolute protections for Euroclear."

EU Leaders Facing Strain from All Sides

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 insistent its money should not be accessed, there are added concerns among European figures that the US may want to use Russia's immobilized billions in another way, as part of its own peace initiative.

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

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