Moscow Retaliates at Europe's Scheme to Loan Immobilized Russian Cash to Ukraine

Kyiv remains depleting its financial resources to maintain its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the remedy to addressing Ukraine's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Use Russia's Assets, Argue Kyiv and Brussels

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

The EU and Ukraine maintain that that capital should be used to reconstruct what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

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

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

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

Belgium is anxious it will be saddled with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

Euroclear also has an roughly €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 refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

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

Until now the EU has refrained from accessing the frozen capital directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is seen as less risky as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

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

• The first is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

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

If Euroclear suffer a loss 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.

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

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote unanimously 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 stay blocked as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the fallout if things fail.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain adequate protections for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

Prof Colaert also argues the stipulation for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to obtain absolute assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

The situation is urgent, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and politically realistic solution".

"It is a decisive moment for us," warns 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant 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