Russia Retaliates at Europe's Scheme to Loan Frozen Russian Assets to Ukraine

Ukraine is running out of financial resources to sustain its military and economy, after close to 48 months of full-scale conflict with Russia.

For Europe, the solution to filling Kyiv's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Utilize Moscow's Assets, Say Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to restore what Russia has devastated: Brussels terms it 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 Ukraine's," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to defend itself effectively against subsequent Russian attacks".

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

Belgium is concerned it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

The EU is racing against time ahead of next Thursday's summit to come up with a compromise that Belgium can agree to.

So far the EU has avoided touching the frozen capital directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is considered permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to borrow the funds on financial markets, guaranteed 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 difficult when two member states oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly matured into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and says it is convinced it has resolved them.

The scheme is for Belgium to be shielded with a guarantee applying to all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit 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.

If Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

Heretofore they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

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

The Reasons Belgium is Remains Satisfied

Brussels is insistent it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra legal costs.

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

"Banks need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

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

EU Leaders Under Pressure from Every Direction

Time is of the essence, caution several 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 financially feasible and politically realistic solution".

"It is a decisive moment for us," says 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be touched, there are additional apprehensions among European figures that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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