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

Ukraine is running out of financial resources to keep going its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Ukraine's funding gap of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to sign that off at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Russia's Funds, Say European and Ukrainian Officials

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

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has destroyed: Brussels calls it a "reconstruction loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against any future Russian attacks".

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

The Belgian government is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

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

So far the EU has avoided accessing the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• One is to raise the money on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly turned into cash. That money is Euroclear property located within the European Central Bank.

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

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

Should Euroclear incur losses 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 went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely 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 ongoing risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Belgium is firm it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the consequences if things fail.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

While the EU might be able to arrange enough protections for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to follow stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly that.

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

EU Leaders Under Pressure from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds differently, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about future co-operation.

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