Russia Responds at Europe's Plan to Lend Immobilized Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to filling Ukraine's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels hope to give it the green light at their Brussels summit next week.

Russian officials warn the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Employ Russia's Assets, Argue Kyiv and Brussels

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has devastated: The European Commission calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is anxious it will be saddled with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

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

Previously the EU has refrained from using the frozen capital directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as less risky as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• One is to secure the capital on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly matured into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and says it is assured it has addressed them.

The plan is for Belgium to be shielded 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, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

Should Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block 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 set to use an extraordinary measure 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.

The Reasons Belgium is Remains On Board

The Belgian government is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and fears being left to handle the fallout if things do not work out.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to get water-tight guarantees for Euroclear."

The European Union Under Pressure from All Sides

Time is of the essence, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the financially feasible and politically achievable solution".

"It is a decisive moment for us," states 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be used, there are added concerns among European figures that the US may want to use Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is working 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 suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving