Russia Retaliates at the EU's Plan to Lend Immobilized Russian Assets to Ukraine

Kyiv remains depleting its funding to maintain its armed forces and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the solution to plugging Ukraine's budget hole of €135.7bn for the following biennium lies in frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Argue European and Ukrainian Officials

In total, Russia has about €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that that capital should be used to restore what Russia has laid waste to: EU officials calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

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

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

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

Previously the EU has held off using the principal funds directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is considered permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• Option one is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly been converted into cash. That funding is an asset of Euroclear located within the European Central Bank.

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

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

Should 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.

Should Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve 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 repeated risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

The Belgian government is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and fears being left to handle the consequences if things fail.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium fears an added risk of being subject to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"It's a matter of destiny for us," says 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about future co-operation.

An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving