Moscow Hits Back at Europe's Proposal to Lend Frozen Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of cash to keep going its military and economy, after almost four years of Russia's full-scale war.

In the view of European leaders, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Use Moscow's Assets, Assert European and Ukrainian Officials

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

The EU and Ukraine maintain that that capital should be used to rebuild what Russia has destroyed: EU officials refers to it as a "reparations loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz argues the assets will "help Ukraine to shield itself efficiently against any future Russian attacks".

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

The Belgian government is anxious it will be left with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is racing against time before next Thursday's summit to come up with a solution that Belgium can support.

Until now the EU has avoided accessing the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed safe as Russia is under sanction and the returns are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to raise the money on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were originally held in securities but have now mostly turned into cash. That money is an asset of Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and says it is assured it has addressed them.

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

If Euroclear suffer a loss 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 targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

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

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and fears being left to handle the repercussions if things do not work out.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra fines or liabilities.

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

"Banks need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"Why do we have 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 vital for Belgium to obtain absolute assurances for Euroclear."

The European Union In a Difficult Position from All Sides

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the fiscally viable and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be touched, there are further worries among European figures that the US may want to employ Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about potential collaboration.

An initial document of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving