Russia Retaliates at the EU's Scheme to Loan Immobilized Russian Assets to Kyiv

Ukraine is depleting its funding to maintain its armed forces and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to addressing Ukraine's financial shortfall of €135.7bn for the next two years is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has approximately €210bn of its assets frozen 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 restore what Russia has devastated: Brussels refers to it as a "loan for reparations" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

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

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

The Belgian government is anxious it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

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

Previously the EU has avoided touching the assets themselves directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is deemed less risky as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now predominantly matured into cash. That capital is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is convinced it has addressed them.

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

Should 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 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 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 expected to use an emergency clause 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.

The Reasons Belgium is Remains Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and fears being left to handle the consequences if things do not work out.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider 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 adequate assurances for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Lenders need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 insistent its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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