Russia Responds at the EU's Proposal to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains facing a severe shortage of financial resources to maintain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Utilize Russia's Assets, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its funds immobilized 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 laid waste to: EU officials terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister 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 left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has avoided accessing the principal funds directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is seen as safe as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• The first is to raise the money on financial markets, backed by the EU budget as a collateral. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly been converted into cash. That money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and states it is convinced it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia targeted Belgium itself, any ruling by a Russian court would not be enforced 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 permanently.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is adamant it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things go wrong.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

Although the EU might be able to secure enough assurances for the loan itself, Belgium fears an additional danger of being exposed to extra fines or liabilities.

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

"Financial institutions need to follow stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

Europe Under Pressure from Every Direction

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

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's immobilized billions differently, 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 mindful the US has been talking to Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving