Russia Retaliates at Europe's Proposal to Loan Immobilized Russian Assets to Kyiv
Ukraine is depleting its funding to sustain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.
For Europe, the answer to plugging Kyiv's budget hole of ā¬135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim 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 suing Euroclear in a Moscow court prior to a final decision is made.
'Only Fair' to Utilize Russia's Assets, Assert Ukraine and the EU
In total, Russia has approximately ā¬210bn of its assets frozen in the EU, and ā¬185bn of that is in the custody of Euroclear.
Brussels and Kyiv maintain that that capital should be used to reconstruct what Russia has devastated: Brussels terms it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy valued at ā¬90bn.
"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed ā and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.
Germany's leader Friedrich Merz says the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".
Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.
Authorities in Brussels is worried it will be saddled with an enormous bill if it all fails, and Euroclear CEO ValƩrie Urbain warns using the assets could "undermine the global financial architecture".
Euroclear also has an roughly ā¬16-17bn frozen in Russia.
The leader of Belgium Bart de Wever has presented the EU with 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.
Explaining the EU's Proposal?
European Union officials is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can accept.
Until now the EU has avoided touching the assets themselves directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to ā¬3.7bn. From a legal standpoint, using the interest is deemed safe as Russia is under sanction and the returns are not Russian sovereign property.
But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.
There are at the moment two EU plans designed to providing Ukraine with ā¬90bn, to cover a large portion of its financial requirements.
- One is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
- That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly turned into cash. That money is an asset of Euroclear held in the European Central Bank.
The EU's executive accepts Belgium has legitimate concerns and states it is convinced it has dealt with them.
The proposal is for Belgium to be shielded with a assurance encompassing all the ā¬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 took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.
As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.
Until now they have had to vote all together every six months to continue the freeze, which could have meant a constant risk to Belgium.
The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.
The Reasons Belgium is Still Not Satisfied
Brussels is firm it remains a committed partner of Ukraine, but sees legal risks in the plan and fears being left to handle the repercussions if things do not work out.
A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.
"The Belgian economy is not large. Belgian GDP is approximately ā¬565bn ā imagine if it would need to bear a ā¬185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.
Although the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.
Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would breach EU banking regulations.
"Financial institutions need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.
"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure water-tight assurances for Euroclear."
The European Union In a Difficult Position from Every Direction
The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the financially feasible and practically possible solution".
"It's a matter of destiny for us," says leading German conservative MP Norbert Rƶttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".
Although Russia is insistent its money should not be accessed, there are added concerns among European figures that the US may want to employ Russia's blocked funds in another way, as part of its own peace initiative.
Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about potential collaboration.
A preliminary version of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving
