Russia Retaliates at the EU's Plan to Loan Immobilized Russian Assets to Kyiv

Kyiv remains facing a severe shortage of cash to sustain its military and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to filling Kyiv's budget hole of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

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

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

Brussels and Kyiv argue that those funds should be used to restore what Russia has laid waste to: EU officials calls it a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

Brussels is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can accept.

Previously the EU has refrained from touching the principal funds directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as less risky as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now predominantly matured into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and claims it is assured it has resolved them.

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

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

Should Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.

Heretofore 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 interests of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the consequences if things do not work out.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain enough assurances for the loan itself, Belgium is concerned about an additional danger of being exposed to extra damages or penalties.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders In a Difficult Position from Every Direction

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the financially feasible and practically possible 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 subsequently. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

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