Russia Retaliates at Europe's Plan to Lend Immobilized Moscow's Funds to Ukraine

Ukraine is facing a severe shortage of cash to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to sign that off at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Utilize Russia's Funds, Say Kyiv and Brussels

All told, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that money should be used to reconstruct what Russia has destroyed: EU officials terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is worried it will be left with an enormous bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered permissible as Russia is subject to sanctions 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 gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is convinced it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

Brussels is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the consequences if things fail.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €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 enough guarantees for the loan itself, Belgium worries about an added risk of being vulnerable to extra fines or liabilities.

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

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

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get absolute protections for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

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 believe the proposal to use Russian funds is "the 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 subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

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