Moscow Retaliates at the EU's Scheme to Loan Immobilized Russian Funds to Kyiv

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their Brussels summit next week.

Russian officials warn the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Employ Russia's Funds, Assert Kyiv and Brussels

In total, Russia has about €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has destroyed: Brussels terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

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

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

Belgium is anxious it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified 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.

Explaining the EU's Plan?

The EU is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can support.

So far the EU has avoided using the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered less risky as Russia is under sanction and the returns are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims 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, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote all together every six months to continue 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 remain frozen as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Still Not On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and worries about being shouldering the consequences if things go wrong.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

While the EU might be able to secure adequate guarantees for the loan itself, Belgium fears an added risk of being subject to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly 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 crucial for Belgium to secure absolute protections for Euroclear."

Europe Under Pressure from All Sides

There is no time to lose, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the fiscally viable and politically achievable solution".

"This is a crucial test 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 finalize the deal in a week's time".

Although Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to use Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been holding discussions with Russia about potential collaboration.

An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving