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

Kyiv remains running out of cash to keep going its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has destroyed: EU officials calls it a "reparations loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

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

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

Belgium is concerned it will be left with an enormous bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "destabilise 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 "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

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

Until now the EU has refrained from touching the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly matured into cash. That money is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has valid worries and states it is convinced it has addressed them.

The proposal is for Belgium to be safeguarded with a guarantee covering all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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 planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the repercussions if things do not work out.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate assurances for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

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

"Banks need to follow capital and liquidity requirements and shouldn't make one enormous loan. 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 stable. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad protections for Euroclear."

Europe Facing Strain from All Sides

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most fiscally viable and politically realistic solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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