Moscow Retaliates at Europe's Plan to Loan Immobilized Russian Assets to Kyiv

Ukraine is depleting its cash to maintain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the solution to filling Kyiv's financial shortfall of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Use Russia's Funds, Argue Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has devastated: Brussels terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself effectively against any future Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

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

What is the EU's Strategy?

Brussels is racing against time before next Thursday's summit to finalize a solution that Belgium can agree to.

So far the EU has held off touching the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly been converted into cash. That capital is Euroclear property located within the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is convinced it has resolved them.

The proposal is for Belgium to be protected 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.

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

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously 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 set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things do not work out.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out 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 Every Direction

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the fiscally viable and politically realistic solution".

"It is a decisive moment for us," says 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".

While Russia is insistent its money should not be used, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

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

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