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

Kyiv remains running out of funding to maintain its military and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to give it the green light at their Brussels summit next week.

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

'Appropriate' to Employ Moscow's Assets, Argue Kyiv and Brussels

In total, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that that capital should be used to restore what Russia has destroyed: EU officials refers to it as a "reparations loan" and has devised a plan to support Ukraine's economy to the tune of €90bn.

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

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

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

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

Euroclear also has an roughly €16-17bn immobilised 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 accept 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 Proposal?

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

Previously the EU has avoided using the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is seen as permissible as Russia is subject to sanctions and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans designed to providing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• Option one is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now mostly matured into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and claims it is confident it has addressed them.

The plan is for Belgium to be protected with a insurance 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 ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an special provision 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.

Why Belgium is Remains On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things fail.

A typically partisan political environment 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 – consider if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to get ironclad protections for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan 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 succeed in a week's time".

Although Russia is adamant its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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