Moscow Responds at Europe's Scheme to Loan Frozen Moscow's Assets to Kyiv

Kyiv remains depleting its funding to keep going its military and economy, after close to 48 months of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Utilize Russia's Funds, Say European and Ukrainian Officials

Overall, Russia has about €210bn of its assets blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has destroyed: The European Commission calls it a "reparations loan" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has avoided accessing the assets themselves directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is considered safe as Russia is subject to sanctions 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 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 proposals seeking to supplying Ukraine with €90bn, to cover a large portion of its financial requirements.

• One is to borrow the funds on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

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

The proposal is for Belgium to be safeguarded with a guarantee applying to 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.

If Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the consequences if things fail.

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

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight assurances for Euroclear."

Europe In a Difficult Position from All Sides

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a financially feasible and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

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

Zelensky has said Ukraine is working with Europe and the US on a recovery 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 suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving