Moscow Retaliates at Europe's Plan to Lend Immobilized Moscow's Cash to Ukraine

Kyiv remains depleting its funding to maintain its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's funding gap of €135.7bn for the following biennium rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Just' to Employ Russia's Funds, Say Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself successfully against any future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

The EU is racing against time before next Thursday's summit to agree on a solution that Belgium can support.

Previously the EU has avoided touching the assets themselves directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as safe as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to furnishing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• Option one is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were originally held in financial instruments but have now largely turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is confident it has addressed them.

The scheme is for Belgium to be shielded with a assurance applying to 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 clearing house which are in the EU.

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

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is adamant it remains a staunch ally of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the fallout if things fail.

A usually 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 around €565bn – imagine 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 secure enough assurances for the loan itself, Belgium fears an further exposure of being subject to extra legal costs.

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

"Banks need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the financially feasible and politically realistic solution".

"This is a crucial test 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 reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to deploy Russia's immobilized billions differently, as part of its own peace initiative.

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

An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving