Russia Retaliates at Europe's Plan to Lend Immobilized Russian Cash to Ukraine

Kyiv remains running out of funding to sustain its military and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Russian officials caution the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Employ Moscow's Assets, Say Kyiv and Brussels

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

The EU and Ukraine maintain that that capital should be used to restore what Russia has destroyed: Brussels terms it a "reconstruction loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be left with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

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

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 was €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on financial markets, secured against the EU budget as a collateral. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now largely matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is confident it has resolved them.

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

Should 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.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block 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 ongoing risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the repercussions if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain enough protections for the loan itself, Belgium fears an additional danger of being exposed 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.

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things fail it would fall to Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to secure absolute guarantees for Euroclear."

EU Leaders Under Pressure from All Sides

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the fiscally viable and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to use Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about potential collaboration.

An early draft of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving