Moscow Retaliates at the EU's Plan to Loan Immobilized Moscow's Assets to Kyiv

Ukraine is running out of financial resources to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Utilize Russia's Assets, Say Kyiv and Brussels

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 money should be used to reconstruct what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz says the assets will "help Ukraine to protect itself efficiently against future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to finalize a arrangement that Belgium can agree to.

So far the EU has held off accessing the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to cover the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at providing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• One is to borrow the funds on the markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is convinced it has dealt with them.

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

Should Euroclear face a financial hit 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 ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and is concerned about being shouldering the fallout if things go wrong.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

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

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to secure water-tight assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and practically possible solution".

"This is a crucial test for us," states 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among European figures that the US may want to use Russia's blocked funds differently, as part of its own diplomatic proposal.

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

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving