Russia Responds at the EU's Scheme to Loan Frozen Moscow's Assets to Kyiv

Ukraine is running out of funding to maintain its military and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

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

All told, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities contend that those funds should be used to restore what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

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

Russia's court action was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is anxious it will be saddled with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

Previously the EU has refrained from using the frozen capital directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is seen as safe as Russia is sanctioned and the returns are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• The first is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in bonds but have now mostly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has resolved them.

The proposal is for Belgium to be safeguarded with a insurance encompassing 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.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the fallout if things fail.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about 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 secure sufficient assurances for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Financial institutions need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is telling 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 rescue Euroclear. That's a further cause why it's so vital for Belgium to get ironclad assurances for Euroclear."

EU Leaders Facing Strain from All Sides

There is no time to lose, caution a group of 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 politically realistic solution".

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

Although Russia is adamant its money should not be touched, there are additional apprehensions among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

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