Moscow Retaliates at the EU's Plan to Loan Immobilized Russian Cash to Kyiv

Ukraine is running out of financial resources to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Utilize Moscow's Funds, Argue Kyiv and Brussels

All told, Russia has about €210bn of its assets frozen in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine argue that money should be used to rebuild what Russia has destroyed: The European Commission terms it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is anxious it will be burdened by an enormous bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

European Union officials is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can accept.

So far the EU has refrained from touching the principal funds directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is deemed less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to supplying Ukraine with €90bn, to cover a large portion of its financial requirements.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult 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 initially held in financial instruments but have now mostly matured into cash. That capital is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and claims it is assured it has addressed them.

The proposal is for Belgium to be safeguarded with a assurance applying to 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.

In the event that Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure 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.

The Reasons Belgium is Still Not Convinced

Belgium is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure adequate guarantees for the loan itself, Belgium worries about an further exposure of being subject to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to follow prudential rules 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 become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to secure absolute protections for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 touched, there are further worries among EU officials that the US may want to use Russia's frozen billions differently, 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 holding discussions with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving