Moscow Responds at the EU's Proposal to Lend Frozen Russian Assets to Ukraine

Kyiv remains depleting its financial resources to keep going its military and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to plugging Kyiv's budget hole of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Use Russia's Assets, Say Ukraine and the EU

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

Brussels and Kyiv maintain that that capital should be used to reconstruct what Russia has laid waste to: EU officials calls it a "loan for reparations" and has devised 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 money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is worried it will be left with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

Euroclear also has an estimated €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 endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Previously the EU has avoided accessing the assets themselves directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is deemed safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at furnishing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• Option one is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is confident it has resolved them.

The proposal is for Belgium to be shielded with a insurance applying to all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Remains Satisfied

Brussels is adamant it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the fallout if things fail.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure adequate guarantees for the loan itself, Belgium fears an added risk of being exposed to extra damages or penalties.

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things fail it would fall to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to get water-tight assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most fiscally viable and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be touched, there are added concerns among leaders in Europe that the US may want to use Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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