Russia Responds at Europe's Proposal to Loan Frozen Russian Assets to Ukraine

Ukraine is facing a severe shortage of funding to maintain its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Kyiv's financial shortfall of €135.7bn for the next two years rests with frozen Russian assets sitting in Belgian bank Euroclear, and Brussels seek to finalize the plan at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

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

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

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has devastated: EU officials calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

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

Belgium is anxious it will be burdened by 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 roughly €16-17bn immobilised in Russia.

Belgium's PM Bart de Wever has set the EU 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.

The Details of the EU's Proposal?

Brussels is racing against time prior to next Thursday's summit to finalize a arrangement that Belgium can support.

So far the EU has held off touching the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is deemed safe as Russia is under sanction and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely matured into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims it is assured it has dealt with them.

The plan is for Belgium to be shielded with a insurance encompassing 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 clearing house which are in the EU.

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

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

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the fallout if things go wrong.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

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

Although the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get ironclad guarantees for Euroclear."

Europe Under Pressure from Every Direction

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and practically possible solution".

"It is a decisive moment 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 unyielding its money should not be touched, there are additional apprehensions among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving