Russia Hits Back at Europe's Scheme to Loan Immobilized Russian Assets to Ukraine

Ukraine is depleting its cash to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the solution to plugging Kyiv's funding gap of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to sign that off at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Russia's Assets, Argue European and Ukrainian Officials

In total, Russia has roughly €210bn of its funds blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has destroyed: EU officials calls it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – 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 defend itself effectively against future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is unhappy.

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 international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is working to the wire before next Thursday's summit to finalize a compromise that Belgium can support.

Previously the EU has refrained from accessing the assets themselves directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is deemed safe as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to cover a majority of its financial requirements.

• One is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly been converted into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and claims it is assured it has resolved them.

The proposal is for Belgium to be safeguarded with a guarantee 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 settlement agency which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an emergency clause 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.

Why Belgium is Still Not Convinced

Belgium is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the consequences if things fail.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate assurances for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

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

"Banks need to comply with capital and liquidity requirements 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 stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's a further cause 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 several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most financially feasible and practically possible 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 subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are added concerns among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

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

A preliminary version 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