Moscow Retaliates at Europe's Plan to Lend Frozen Moscow's Funds to Ukraine

Kyiv remains running out of cash to maintain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's funding gap of €135.7bn for the coming 24 months lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Moscow's Assets, Argue Kyiv and Brussels

Overall, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv maintain that money should be used to restore what Russia has devastated: EU officials refers to it as a "loan for reparations" and has come up with a plan to support 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 that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

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

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

European Union officials is racing against time before next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has refrained from accessing the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is under sanction and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in securities but have now largely matured into cash. That funding is Euroclear property held in the European Central Bank.

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

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

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

Until now they have had to vote unanimously 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 continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things go wrong.

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

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

Although the EU might be able to secure enough protections for the loan itself, Belgium fears an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and practically possible 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 subsequently. That's why we have to finalize the deal in a week's time".

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

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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