Russia Retaliates at the EU's Proposal to Lend Immobilized Russian Assets to Kyiv

Kyiv remains facing a severe shortage of funding to keep going its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Employ Russia's Assets, Argue Kyiv and Brussels

All told, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

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

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is anxious it will be burdened by an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

Euroclear also has an estimated €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 endorse the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure prior to next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has refrained from using the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed permissible as Russia is under sanction and the returns are not Russian sovereign property.

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

There are at the moment two EU plans seeking to supplying Ukraine with €90bn, to cover a majority of its budgetary necessities.

• The first is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were originally held in securities but have now largely turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is convinced it has resolved them.

The scheme is for Belgium to be safeguarded with a insurance covering 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.

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

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected 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 financial well-being of the union" continues.

The Reasons Belgium is Remains Satisfied

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

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra legal costs.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

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

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to secure water-tight guarantees for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the economically realistic 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 next. That's why we have to finalize the deal in a week's time".

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

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about possible partnership.

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