Moscow Responds at the EU's Scheme to Loan Immobilized Moscow's Assets to Ukraine

Kyiv remains depleting its funding to maintain its military and economy, after nearly four years of the ongoing invasion by Moscow.

For Europe, the solution to plugging Kyiv's funding gap of €135.7bn for the coming 24 months is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to give it the green light at their EU leaders' conference next week.

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

'Only Fair' to Employ Russia's Funds, Argue European and Ukrainian Officials

All told, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has devastated: Brussels refers to it as a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," states Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is worried it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has held off using the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is considered permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to borrow the funds on financial markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is confident it has dealt with them.

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

Should Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are set to approve on Friday to permanently block 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 continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the repercussions if things fail.

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

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things fail it would be up to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to secure 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 bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the financially feasible and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

An initial document 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