Moscow Retaliates at the EU's Scheme to Loan Immobilized Russian Cash to Kyiv

Ukraine is facing a severe shortage of financial resources to keep going its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the answer to plugging Ukraine's funding gap of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to finalize the plan at their Brussels summit next week.

Russian officials state the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Russia's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to reconstruct what Russia has devastated: The European Commission refers to it as a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself efficiently against future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is concerned it will be burdened by an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

Brussels is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Until now the EU has held off using the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is considered safe as Russia is under sanction and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to furnishing Ukraine with €90bn, to finance a majority of its financial requirements.

• The first is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now predominantly turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

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

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

If Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote all together every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the repercussions if things fail.

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

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

While the EU might be able to obtain enough protections for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

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

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to secure absolute guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

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

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

Although Russia is insistent its money should not be used, there are added concerns among European figures that the US may want to employ Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about future co-operation.

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