Moscow Retaliates at the EU's Scheme to Lend Immobilized Moscow's Funds to Ukraine

Ukraine is facing a severe shortage of cash to sustain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Kyiv's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Use Russia's Funds, Assert Kyiv and Brussels

All told, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has devastated: Brussels terms it a "loan for reparations" and has devised a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself effectively against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be burdened by an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has held off touching the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options designed to furnishing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• Option one is to raise the money on the markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly turned into cash. That capital is Euroclear property deposited at the European Central Bank.

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

The scheme is for Belgium to be protected with a insurance encompassing 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.

In the event that Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized 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 for the foreseeable future.

Heretofore they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things go wrong.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra legal costs.

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would be up to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad protections for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and practically possible solution".

"It is a decisive moment for us," says 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".

While Russia is adamant its money should not be used, there are added concerns among EU officials that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been engaging with Russia about future co-operation.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving