Russia Responds at Europe's Proposal to Loan Immobilized Russian Assets to Kyiv

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

For Europe, the remedy to plugging Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Employ Moscow's Assets, Say European and Ukrainian Officials

In total, Russia has about €210bn of its funds blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that those funds should be used to restore what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself efficiently against future Russian attacks".

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

The Belgian government is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the world's financial order".

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 agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can agree to.

So far the EU has avoided touching the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly been converted into cash. That capital is owned by Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is convinced it has resolved them.

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

If 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.

If Russia targeted Belgium itself, any ruling by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is insistent it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being forced to deal with the fallout if things go wrong.

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

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

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra damages or penalties.

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

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

"Why do we have these banking laws? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad protections for Euroclear."

Europe Facing Strain from All Sides

Time is of the essence, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most financially feasible and politically realistic solution".

"This is a crucial test for us," states 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".

While Russia is unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with 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