Moscow Retaliates at Europe's Scheme to Lend Immobilized Moscow's Assets to Ukraine

Kyiv remains depleting its cash to keep going its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Use Russia's Funds, Argue Ukraine and the EU

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

The EU and Ukraine argue that money should be used to restore what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €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 Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against subsequent Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

Euroclear also has an approximate €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 endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

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

Until now the EU has refrained from touching the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has valid worries and claims it is assured it has addressed them.

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

Should Euroclear suffer a loss 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.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be accepted 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 permanently.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being forced to deal with the repercussions if things go wrong.

A normally fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to obtain sufficient protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra damages or penalties.

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

"Banks need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute assurances for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most economically realistic and politically achievable 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 finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among European figures that the US may want to use Russia's immobilized billions differently, as part of its own peace plan.

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

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