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

Kyiv remains depleting its financial resources to maintain its military and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the solution to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Russia's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv contend that that capital should be used to reconstruct what Russia has devastated: The European Commission calls it a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself effectively against future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

European Union officials is working to the wire prior to next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has refrained from touching the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at supplying Ukraine with €90bn, to finance a majority of its funding needs.

• One is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice 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 makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and says it is convinced it has addressed them.

The proposal is for Belgium to be protected with a guarantee covering all the €210bn of Russian assets in the EU.

If Euroclear incur losses 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 targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Belgium is adamant it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and is concerned about being forced to deal with the fallout if things do not work out.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra legal costs.

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

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

The European Union Facing Strain from All Sides

The situation is urgent, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding 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 mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving