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

Kyiv remains depleting its funding to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the following biennium rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Use Russia's Funds, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has destroyed: Brussels refers to it as a "loan for reparations" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, 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 ahead of next Thursday's summit to agree on a arrangement that Belgium can accept.

So far the EU has refrained from accessing the principal funds directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• One is to raise the money on the markets, secured against the EU budget as a surety. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly been converted into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is convinced it has resolved them.

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

Should Euroclear incur losses 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.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be recognized 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 permanently.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the consequences if things go wrong.

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

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

Although the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra damages or penalties.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and politically achievable solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 adamant its money should not be touched, there are additional apprehensions among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

An initial document 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