Russia Hits Back at Europe's Proposal to Loan Frozen Russian Assets to Ukraine

Ukraine is depleting its funding to sustain its armed forces and economy, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to addressing Ukraine's funding gap of €135.7bn for the coming 24 months is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Employ Russia's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities maintain that money should be used to restore what Russia has laid waste to: Brussels refers to it as a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is anxious it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

The EU is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can support.

Previously the EU has refrained from accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed safe as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up 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 furnishing Ukraine with €90bn, to cover a majority of its financial requirements.

• One is to borrow the funds on the markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is assured it has dealt with them.

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

If Euroclear suffer a loss 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 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 set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote all together every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Not Yet On Board

Belgium is firm it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things fail.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an added risk of being exposed to extra legal costs.

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get absolute protections for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a economically realistic and politically achievable 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 subsequently. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to employ Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has said Ukraine is working 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 initial document 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