Russia Responds at the EU's Scheme to Lend Immobilized Russian Assets to Ukraine

Kyiv remains depleting its financial resources to sustain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the remedy to filling Ukraine's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders hope to finalize the plan at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Russia's Funds, Assert Kyiv and Brussels

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has destroyed: The European Commission terms it a "reparations loan" and has devised a plan to support Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is racing against time ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Previously the EU has held off accessing the principal funds directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as safe as Russia is under sanction and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to raise the money on financial markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly matured into cash. That capital is Euroclear property deposited at the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is assured it has dealt with them.

The proposal is for Belgium to be safeguarded with a assurance 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.

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an special provision 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.

Why Belgium is Still Not Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being left to handle the repercussions if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra legal costs.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 insistent its money should not be touched, there are added concerns among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving