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

Kyiv remains running out of cash to sustain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels hope to finalize the plan at their EU leaders' conference next week.

Russian officials caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Employ Russia's Funds, Argue Ukraine and the EU

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

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has devastated: Brussels calls it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

The EU is under pressure before next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has refrained from accessing the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered less risky as Russia is sanctioned and the returns are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options designed to furnishing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to borrow the funds on the 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 Hungary and Slovakia object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were originally held in securities but have now largely been converted into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

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

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

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are set to use an special provision 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.

The Reasons Belgium is Remains Convinced

Brussels is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and fears being left to handle the fallout if things fail.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also believes the stipulation for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Lenders need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

The European Union In a Difficult Position from Every Direction

Time is of the essence, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the economically realistic and politically achievable solution".

"It is a decisive moment 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to use Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

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