Moscow Retaliates at Europe's Scheme to Lend Immobilized Russian Assets to Kyiv

Ukraine is running out of cash to sustain its armed forces and economy, after close to 48 months of Russia's full-scale war.

For Europe, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

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

'Just' to Use Moscow's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv maintain that that capital should be used to rebuild what Russia has destroyed: EU officials refers to it as a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself efficiently against future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

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

The Details of the EU's Proposal?

The EU is working to the wire ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

Previously the EU has held off accessing the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is considered permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at supplying Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to secure the capital on the markets, backed by the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is assured it has addressed them.

The proposal is for Belgium to be safeguarded with a insurance covering all the €210bn of Russian assets in the EU.

Should Euroclear incur losses 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.

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

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an emergency clause 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.

Why Belgium is Not Yet On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and fears being left to handle the repercussions if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to secure adequate protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

Prof Colaert also contends the demand for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

Europe In a Difficult Position from All Sides

Time is of the essence, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and politically achievable 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 reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

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

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