Moscow Retaliates at Europe's Plan to Loan Immobilized Moscow's Funds to Ukraine

Kyiv remains running out of cash to maintain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels hope to finalize the plan at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an act of theft, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Moscow's Assets, Assert Ukraine and the EU

In total, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is worried it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

Brussels is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can support.

So far the EU has held off accessing the principal funds directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is seen as safe as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at providing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has valid worries and says it is convinced it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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 special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the fallout if things fail.

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

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

While the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an additional danger of being vulnerable to extra legal costs.

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

"Banks need to adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do just 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 rescue Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad assurances for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and practically possible 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 next. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.

A preliminary version of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving