Moscow Responds at Europe's Proposal to Lend Immobilized Russian Assets to Kyiv

Kyiv remains running out of funding to maintain its military and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the answer to plugging Kyiv's funding gap of €135.7bn for the following biennium is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Just' to Use Moscow's Funds, Say Ukraine and the EU

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

The EU and Ukraine argue that those funds should be used to rebuild what Russia has devastated: The European Commission refers to it as a "reparations loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself successfully against any future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is anxious it will be left with an enormous bill if it all backfires, and Euroclear head Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

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

Until now the EU has held off accessing the assets themselves directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at furnishing Ukraine with €90bn, to cover a large portion of its funding needs.

• The first is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now largely turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has resolved them.

The proposal is for Belgium to be shielded with a guarantee covering 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.

If Russia targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

Brussels is firm it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and fears being forced to deal with the consequences if things go wrong.

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.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium worries about an added risk of being subject to extra fines or liabilities.

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

"Financial institutions need to follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to save Euroclear. That's another reason why it's so important for Belgium to secure ironclad protections for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic 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 afterwards. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own diplomatic proposal.

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

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