Russia Retaliates at the EU's Plan to Lend Frozen Moscow's Assets to Ukraine
Kyiv remains depleting its cash to sustain its military and economy, after almost four years of full-scale conflict with Russia.
From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.
Russian officials caution the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.
'Appropriate' to Employ Moscow's Assets, Assert European and Ukrainian Officials
In total, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear.
European and Ukrainian authorities maintain that that capital should be used to restore what Russia has laid waste to: Brussels calls it a "reparations loan" and has come up with a plan to prop up 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 devastated – and that those funds then becomes ours," states Ukraine's Volodymyr Zelensky.
Germany's leader Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against subsequent Russian attacks".
Russia's court action was expected in Brussels. But it is not only Moscow that is unhappy.
The Belgian government is anxious it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".
Euroclear also has an estimated €16-17bn locked in Russia.
Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.
The Details of the EU's Strategy?
The EU is under pressure before next Thursday's summit to come up with a arrangement that Belgium can support.
Until now the EU has held off accessing the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.
But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.
There are at the moment two EU options designed to supplying Ukraine with €90bn, to cover a majority of its funding needs.
- One is to borrow the funds on the markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
- This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly turned into cash. That funding is Euroclear property held in the European Central Bank.
Brussels' executive arm acknowledges Belgium has valid worries and claims it is confident it has resolved them.
The scheme is for Belgium to be safeguarded with a guarantee encompassing all the €210bn of Russian assets in the EU.
Should 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.
If Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.
In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.
Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium.
The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.
The Reasons Belgium is Still Not On Board
Belgium is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the fallout if things fail.
A typically partisan political environment 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 around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.
Although the EU might be able to secure enough assurances for the loan itself, Belgium fears an added risk of being vulnerable to extra damages or penalties.
Prof Colaert also argues the requirement for Euroclear to provide a loan to the EU would contravene EU banking regulations.
"Banks need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.
"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to secure water-tight guarantees for Euroclear."
The European Union Facing Strain from Multiple Fronts
There is no time to lose, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a economically realistic and practically possible solution".
"This is a crucial test for us," warns 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 succeed in a week's time".
While Russia is adamant its money should not be touched, there are added concerns among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own peace plan.
Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about possible partnership.
An early draft of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving
