Russia Retaliates at the EU's Plan to Lend Frozen Moscow's Cash to Ukraine

Kyiv remains depleting its financial resources to keep going its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Employ Russia's Assets, Argue Ukraine and the EU

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

European and Ukrainian authorities maintain that money should be used to rebuild what Russia has devastated: EU officials refers to it as a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

Russia's court action was anticipated in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the world's financial order".

Euroclear also has an roughly €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 accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

European Union officials is racing against time prior to next Thursday's summit to agree on a arrangement that Belgium can support.

Previously the EU has refrained from using the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered less risky as Russia is sanctioned and the returns are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now mostly been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and says it is confident it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset 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 enforced in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

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

The Reasons Belgium is Remains On Board

The Belgian government is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and fears being forced to deal with 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 other European officials.

"The Belgian economy is not large. Belgian GDP is about €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an added risk of being exposed to extra legal costs.

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

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

The situation is urgent, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a economically realistic and practically possible 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 next. 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 EU officials that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about possible partnership.

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