Russia Retaliates at the EU's Plan to Lend Frozen Russian Assets to Kyiv

Kyiv remains running out of financial resources to maintain 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 Kyiv's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

'Appropriate' to Utilize Russia's Funds, Say Kyiv and Brussels

All told, Russia has about €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: Brussels terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently 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 worried it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

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

So far the EU has avoided touching the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is under sanction and the proceeds are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive accepts Belgium has valid worries and claims it is convinced it has addressed them.

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

Should Euroclear face a financial hit 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 targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote by consensus 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 financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the consequences if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

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

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

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

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight assurances for Euroclear."

The European Union Under Pressure from All Sides

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and politically realistic solution".

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

Although Russia is insistent its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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