Moscow Retaliates at the EU's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is facing a severe shortage of cash to sustain its military and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

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

Overall, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine contend that that capital should be used to rebuild what Russia has devastated: The European Commission calls it a "reparations loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against future Russian attacks".

Russia's court action was expected in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is worried it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Previously the EU has avoided touching the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is considered permissible as Russia is sanctioned and the returns are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now largely matured into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has valid worries and states it is assured it has resolved them.

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

If Euroclear suffer a loss 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 recognized in the EU.

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

Heretofore they have had to vote all together every six months to renew the freeze, which could have meant a constant 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 "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the fallout if things go wrong.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient guarantees for the loan itself, Belgium is concerned about an added risk of being exposed to extra damages or penalties.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad protections for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and practically possible solution".

"It's a matter of destiny 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 succeed in a week's time".

While Russia is adamant its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about potential collaboration.

A preliminary version 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