Moscow Retaliates at the EU's Plan to Lend Immobilized Russian Assets to Ukraine

Ukraine is depleting its financial resources to sustain its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the answer to filling Kyiv's financial shortfall of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Russia's Funds, Assert Ukraine and the EU

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

The EU and Ukraine contend that those funds should be used to reconstruct what Russia has devastated: EU officials refers to it as a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself effectively against future Russian attacks".

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

Belgium is anxious it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

Euroclear also has an roughly €16-17bn locked 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 "poses significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is under pressure prior to next Thursday's summit to come up with a solution 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 amounted to €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is sanctioned and the proceeds are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to finance two-thirds of its funding needs.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly turned into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is assured it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered 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 ruling by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now 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 emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not On Board

Belgium is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being forced to deal with the repercussions if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to secure enough assurances for the loan itself, Belgium worries about an added risk of being subject to extra fines or liabilities.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get ironclad guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and politically achievable solution".

"This is a crucial test for us," warns 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

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

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