Russia Hits Back at Europe's Plan to Lend Frozen Russian Assets to Ukraine

Kyiv remains facing a severe shortage of cash to maintain its armed forces and economy, after almost four years of full-scale conflict with Russia.

For Europe, the answer to plugging Kyiv's financial shortfall of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has devastated: Brussels refers to it as a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself successfully against future Russian attacks".

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

The Belgian government is worried it will be burdened by an massive bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

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

Previously the EU has held off using the frozen capital directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is considered safe as Russia is sanctioned and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• The first is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly matured into cash. That capital is Euroclear property located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and claims it is assured it has addressed them.

The plan is for Belgium to be shielded with a assurance encompassing 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 settlement agency 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 expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

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

The Reasons Belgium is Not Yet Convinced

Brussels is insistent it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the repercussions if things fail.

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

"The Belgian economy is not large. Belgian GDP is about €565bn – consider 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 is concerned about an additional danger of being vulnerable to extra legal costs.

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

"Banks need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to obtain ironclad protections for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to 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