Russia Retaliates at Europe's Scheme to Lend Immobilized Russian Assets to Ukraine

Kyiv remains depleting its cash to sustain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to plugging Kyiv's budget hole of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels hope to give it the green light at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Utilize Moscow's Funds, Argue Ukraine and the EU

All told, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that money should be used to rebuild what Russia has destroyed: EU officials refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is worried it will be left with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided touching the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to providing Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to borrow the funds on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were initially held in bonds but have now largely turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is confident it has dealt with them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

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

Heretofore they have had to vote unanimously every six months to extend 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 continue to be immobilized as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet On Board

Belgium is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things do not work out.

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

"Belgium is a small economy. Belgian GDP is about €565bn – think about 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 arrange sufficient assurances for the loan itself, Belgium worries about an further exposure of being subject to extra fines or liabilities.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing 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 another reason why it's so vital for Belgium to obtain absolute protections for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and politically realistic 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns 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 said Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

A preliminary version 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