Moscow Retaliates at the EU's Plan to Lend Immobilized Russian Cash to Kyiv

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

In the view of European leaders, the solution to plugging Kyiv's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Employ Russia's Funds, Say Ukraine and the EU

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is anxious it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can accept.

Until now the EU has refrained from touching the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is considered permissible as Russia is under sanction and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• One is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now largely matured into cash. That capital is an asset of Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is confident it has dealt with them.

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being forced to deal with the consequences if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – think about if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain adequate protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra legal costs.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure absolute protections for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

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