Russia Hits Back at Europe's Scheme to Loan Immobilized Moscow's Funds to Ukraine

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

For Europe, the solution to filling Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

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

All told, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has destroyed: EU officials terms it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be left with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

Brussels is under pressure before next Thursday's summit to agree on a solution that Belgium can accept.

Previously the EU has avoided using the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap left 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 cover a large portion of its financial requirements.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now largely matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is convinced it has addressed them.

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

If Euroclear suffer a loss 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.

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are set to use an extraordinary measure 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 Not Yet Satisfied

Belgium is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and is concerned about being left to handle the repercussions if things fail.

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

"The Belgian economy is not large. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? 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 an additional reason why it's so crucial for Belgium to get absolute assurances for Euroclear."

Europe In a Difficult Position from Every Direction

Time is of the essence, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also mindful 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