Russia Hits Back at the EU's Scheme to Lend Frozen Russian Assets to Ukraine

Kyiv remains depleting its financial resources to keep going its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Ukraine's funding gap of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn 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 Employ Moscow's Assets, Say Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to restore what Russia has devastated: The European Commission terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Plan?

Brussels is racing against time before next Thursday's summit to come up with a solution that Belgium can support.

Until now the EU has refrained from touching the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered permissible as Russia is subject to sanctions and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• The first is to borrow the funds on the markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly turned into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is confident it has addressed them.

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

Should Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

If Russia went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is about €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an further exposure of being subject to extra legal costs.

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

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

The situation is urgent, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," says 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".

While Russia is unyielding its money should not be touched, there are further worries among European figures that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace initiative.

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

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