Moscow Retaliates at the EU's Proposal to Lend Frozen Moscow's Assets to Kyiv

Ukraine is depleting its financial resources to keep going its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's financial shortfall of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Employ Moscow's Funds, Say European and Ukrainian Officials

Overall, Russia has roughly €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that that capital should be used to rebuild what Russia has devastated: Brussels terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

Euroclear also has an roughly €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 agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to come up with a arrangement that Belgium can accept.

Previously the EU has avoided accessing the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at providing Ukraine with €90bn, to finance a large portion of its funding needs.

• The first is to raise the money on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has valid worries and says it is assured it has resolved them.

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

If Euroclear incur losses 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.

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.

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 set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the fallout if things do not work out.

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

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

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

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

"Banks need to adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight assurances for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and politically realistic solution".

"It's a matter of destiny 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 succeed in a week's time".

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

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

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