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| Ukraine's president says it is right for Russia's frozen assets to be used to rebuild his country(Image: Thierry Mosasse/Getty Image) |
In response to Ukraine's European allies' attempts to use Moscow's frozen assets to assist Kyiv in funding its economy and military, Russia is taking legal action. The Russian Central Bank is suing Belgian bank Euroclear in a Moscow court, and Russian officials accuse the EU of an act of theft.
Ukraine is running out of cash, after almost four years of Russia's full-scale war.
The frozen cash held by Euroclear is Europe's solution to Kyiv's budget hole of €135.7 billion (£119 billion; $159 billion) for the next two years, and EU leaders hope to sign off on that at their summit in Brussels next week.
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'Only fair' to use Russia's assets
In total, Russia had about €210bn of its assets frozen in the EU within days of the full-scale invasion of Ukraine in February 2022, and €185bn of that is held by Euroclear.
The EU and Ukraine argue that money should be used to rebuild what Russia destroyed. Brussels has devised a plan to support Ukraine's economy with €90 billion and calls it a "reparations loan." "It's only fair that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.
The assets will "enable Ukraine to protect itself effectively against future Russian attacks," according to German Chancellor Friedrich Merz. Russia's court action was expected in Brussels and European Economic Commissioner Valdis Dombrovskis said on Friday that EU financial institutions were "fully protected" from legal proceedings.
But it is not just Moscow that is unhappy.
Belgium is worried it will be saddled with an enormous bill if it all goes wrong and Euroclear chief executive Valérie Urbain says using it could "destabilise the international financial system".
Euroclear also has an estimated €16-17bn immobilised in Russia.
Before he will accept the reparations plan, Belgian Prime Minister Bart de Wever has set a series of "rational, reasonable, and justified conditions" for the EU, and he has refused to rule out legal action if it "poses significant risks" for his nation.
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| Belgian Prime Minister Bart de Wever discussed Europe's frozen assets plan with UK Prime Minister Sir Keir Starmer on Friday(Image: EPA/Shutterstock) |
What is the EU's plan?
Prior to the summit on Thursday of next week, the EU is working relentlessly to find a solution that Belgium can accept. The EU hasn't touched the assets themselves yet, but since last year, it has paid Ukraine the "windfall profits" from them. That was €3.7 billion in 2024. Legally using the interest is seen as safe as Russia is under sanction and the proceeds are not Russian sovereign property.
However, international military aid for Ukraine has decreased significantly in 2025, and Europe has struggled to make up the shortfall as a result of the United States' decision under President Donald Trump to virtually stop funding Ukraine.
There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover two-thirds of its funding needs.
One is to raise the money on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
This leaves the option of lending Ukraine money from the Russian assets, which were initially held in the form of securities but have since largely matured into cash. That money is Euroclear property held in the European Central Bank.
The EU's executive, the European Commission, accepts Belgium has legitimate concerns and says it is confident it has dealt with them.
A guarantee for all 210 billion euros worth of Russian assets in the EU is planned to safeguard Belgium. A source from the Commission explained that if Euroclear lost its own assets in Russia, those losses would be offset by assets in the EU that belong to Russia's own clearing house. If Russia went after Belgium itself, any ruling by a Russian court would not be recognised in the EU.
In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.
They have had to vote unanimously every six months to extend the freeze up until now, which could have put Belgium at risk again. Under Article 122 of the EU Treaties, the EU ambassadors plan to use an emergency clause to keep the assets frozen as long as there is an "immediate threat to the economic interests of the union."
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| The German chancellor (L) says the EU's plan will enable Ukraine to defend itself(Image: Thierry Monasse/Getty Image) |
Why Belgium is not yet satisfied
Belgium insists that it will always support Ukraine, but it sees legal risks in the plan and worries that it will have to deal with the consequences if something goes wrong. Prime Minister Bart de Wever, who is under pressure from colleagues in Europe, has received support from a typically divided political landscape in this instance. "Very important decisions" would be made by the EU in the coming week, he said during a meeting with UK Prime Minister Sir Keir Starmer in London on Friday. He went on to say that the United Kingdom and Belgium would collaborate in order to "get the certainty that we can support Ukraine to remain a free, democratic, and sovereign country." The EU believes it can secure sufficient guarantees for the loan itself, but Belgium fears an added risk of being exposed to extra damages or penalties.
"Belgium is a small economy. Veerle Colaert, a professor of financial law at KU Leuven University, says, "Imagine if it were required to shoulder a €185 billion bill. The Belgian GDP is approximately €565 billion." Additionally, she believes that Euroclear's obligation to provide the EU with a loan would be in violation of EU banking regulations. "Banks shouldn't put all their eggs in one basket because they need to meet capital and liquidity requirements. Euroclear is now being instructed to do just that by the EU. "Why do we have these bank rules? We want banks to be stable as a result. Additionally, Belgium would be responsible for rescuing Euroclear in the event of a disaster. That's another reason why it's so important for Belgium to secure water-tight guarantees for Euroclear."
Europe under pressure from every direction:
There is no time to lose, warn seven EU member states including those closest geographically to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and politically realistic solution".
"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".
Even though Russia insists that its money should not be touched, European officials are also concerned that the United States might want to use Russia's frozen billions in a different way as part of its own peace plan. Zelensky has stated that Ukraine is working on a reconstruction fund with Europe and the United States, but he is aware that the United States has been in contact with Russia about possible future collaboration. A preliminary version of the US peace plan mentioned that the US would use $100 billion of Russia's frozen assets for reconstruction, with the US receiving fifty percent of the profits and Europe contributing another $100 billion. The remaining assets would then be put to use in a joint investment project between the United States and Russia. According to a source from the EU, the added benefit of Friday's anticipated vote to permanently freeze Russia's assets made it harder for anyone to take the money away. It is implied that the United States would then need to persuade the majority of EU members to vote for a plan that would cost them a lot of money financially.
Source: BBC NEWS.
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