Moscow Hits Back at the EU's Plan to Lend Frozen Russian Assets to Ukraine

Ukraine is depleting its funding to maintain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Ukraine's funding gap of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has destroyed: The European Commission terms it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be left with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Plan?

The EU is racing against time prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has avoided using the principal funds directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying 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 seeking to furnishing Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now largely been converted into cash. That capital is Euroclear property held in the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is confident it has dealt with them.

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

If Euroclear suffer a loss 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.

In the event that Russia went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

Brussels is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the consequences if things go wrong.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure adequate assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

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

"Financial institutions need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

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

Europe In a Difficult Position from Every Direction

There is no time to lose, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most financially feasible and practically possible solution".

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

While Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about potential collaboration.

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