Russia Retaliates at Europe's Plan to Loan Immobilized Russian Assets to Ukraine

Kyiv remains depleting its financial resources to maintain its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Russia's Funds, Say Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to restore what Russia has laid waste to: EU officials terms it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "help 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 concerned.

Belgium is anxious it will be saddled with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgium's PM 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 not excluded legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can agree to.

So far the EU has avoided accessing the frozen capital directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is considered less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult 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 options designed to supplying Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now predominantly been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is confident it has addressed them.

The plan is for Belgium to be protected with a guarantee applying to 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.

Should Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

Previously they have had to vote all together every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the fallout if things do not work out.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to secure enough assurances for the loan itself, Belgium worries about an further exposure of being subject to extra fines or liabilities.

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

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

"Why do we have these banking laws? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to obtain water-tight protections for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. 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 deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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