Russia Retaliates at Europe's Proposal to Lend Frozen Russian Assets to Kyiv

Ukraine is running out of cash to keep going its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to filling Ukraine's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Just' to Utilize Moscow's Assets, Say European and Ukrainian Officials

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

The EU and Ukraine contend that money should be used to rebuild what Russia has devastated: EU officials refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

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

The Belgian government is concerned it will be left with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is under pressure prior to next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has avoided touching the principal funds directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to supplying Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• The first is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly turned into cash. That money is owned by Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is convinced it has resolved them.

The plan is for Belgium to be protected 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 shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

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

Why Belgium is Remains On Board

Brussels is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and is concerned about being shouldering the repercussions if things do not work out.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is about €565bn – think about if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange adequate guarantees for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

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

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

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Every Direction

Time is of the essence, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

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

An early draft 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