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

Kyiv remains depleting its financial resources to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the answer to addressing Kyiv's budget hole of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Employ Moscow's Assets, Argue European and Ukrainian Officials

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

Brussels and Kyiv contend that those funds should be used to restore what Russia has destroyed: Brussels terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to shield itself effectively against future Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure before next Thursday's summit to finalize a arrangement that Belgium can accept.

So far the EU has held off accessing the frozen capital directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as safe as Russia is under sanction and the earnings are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options designed to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in securities but have now largely turned into cash. That money is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and states it is convinced it has resolved them.

The scheme is for Belgium to be shielded with a assurance covering all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

Previously they have had to vote by consensus every six months to renew 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 stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things go wrong.

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.

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

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

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

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. 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 obtain water-tight guarantees for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

Time is of the essence, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most economically realistic and politically achievable solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be used, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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