Russia Retaliates at the EU's Plan to Loan Frozen Russian Assets to Ukraine

Ukraine is depleting its financial resources to sustain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the remedy to filling Ukraine's funding gap of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Moscow's Funds, Say Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to protect itself effectively against future Russian attacks".

Russia's court action was anticipated 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 goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

Euroclear also has an approximate €16-17bn frozen 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 left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

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

Until now the EU has held off using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

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 all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in bonds but have now mostly been converted into cash. That capital is Euroclear property deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and states it is assured it has resolved them.

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

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

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

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 planning 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.

Why Belgium is Not Yet Convinced

Belgium is adamant it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being left to handle the fallout 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.

"Belgium is a small economy. Belgian GDP is approximately €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 secure adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure absolute guarantees for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It's a matter of destiny for us," states 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".

Although Russia is insistent its money should not be used, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace initiative.

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

An early draft of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving