Moscow Retaliates at Europe's Plan to Lend Immobilized Moscow's Funds to Kyiv

Kyiv remains running out of funding to keep going its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the coming 24 months is found in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Russia's Assets, Say Ukraine and the EU

All told, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that that capital should be used to rebuild what Russia has destroyed: EU officials calls it a "reparations loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against subsequent Russian attacks".

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

Belgium is worried it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

Euroclear also has an roughly €16-17bn frozen in Russia.

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to finalize a arrangement that Belgium can agree to.

Until now the EU has held off touching the principal funds directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as safe as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options designed to furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• One is to raise the money on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now largely turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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 went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and is concerned about being forced to deal with 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 facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't concentrate risk. 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 stable. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about possible partnership.

A preliminary version of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving