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

Kyiv remains depleting its cash to keep going its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the following biennium is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Employ Russia's Funds, Assert Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to reconstruct what Russia has devastated: Brussels terms it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself effectively against future Russian attacks".

Russia's court action was expected 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 fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgium's PM 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 not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

Brussels is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can accept.

So far the EU has held off touching the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the deficit 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 cover a majority of its financial requirements.

• Option one is to secure the capital on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now predominantly been converted into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and claims it is assured it has addressed them.

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

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

Should Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an emergency clause 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 Still Not Satisfied

Brussels is adamant it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being shouldering the fallout if things go wrong.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

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

"Banks need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure absolute protections for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, 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 fiscally viable and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 adamant its money should not be touched, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

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

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