Moscow Responds at Europe's Scheme to Lend Immobilized Moscow's Assets to Kyiv

Ukraine is depleting its funding to sustain its military and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, 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 Brussels seek to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine maintain that those funds should be used to restore what Russia has devastated: Brussels terms it a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is worried it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is racing against time before next Thursday's summit to finalize a arrangement that Belgium can agree to.

Previously the EU has avoided using the principal funds directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were initially held in securities but have now largely turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and claims it is assured it has resolved them.

The plan is for Belgium to be protected with a guarantee covering all the €210bn of Russian assets in the EU.

Should 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.

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

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

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

The EU ambassadors are set 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.

The Reasons Belgium is Remains Convinced

The Belgian government is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being forced to deal with the repercussions if things fail.

A usually fractured political scene in this case has rallied 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, expert in financial law at KU Leuven University.

While the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad protections for Euroclear."

Europe Facing Strain from Multiple Fronts

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about potential collaboration.

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving