Moscow Retaliates at Europe's Scheme to Loan Immobilized Moscow's Funds to Ukraine

Kyiv remains running out of financial resources to keep going its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the solution to plugging Ukraine's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials aim to give it the green light at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Russia's Assets, Assert Kyiv and Brussels

All told, Russia has approximately €210bn of its funds blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that that capital should be used to reconstruct what Russia has devastated: EU officials terms it a "reparations loan" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself effectively against future Russian attacks".

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

The Belgian government is worried it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the world's financial order".

Euroclear also has an approximate €16-17bn immobilised in Russia.

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can accept.

Until now the EU has refrained from using the principal funds directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as less risky as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to cover the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now predominantly turned into cash. That money is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has justified fears and says it is confident it has dealt with them.

The plan is for Belgium to be protected with a insurance encompassing all the €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.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to continue 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 remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and worries about being left to handle the fallout if things fail.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

Although the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to get ironclad assurances for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

An early draft of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving