Russia Retaliates at the EU's Scheme to Lend Immobilized Moscow's Cash to Kyiv

Ukraine is depleting its funding to keep going its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to filling Ukraine's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Employ Moscow's Funds, Say Kyiv and Brussels

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

Brussels and Kyiv argue that money should be used to rebuild what Russia has devastated: Brussels calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is worried it will be left with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to come up with a compromise that Belgium can support.

Until now the EU has refrained from touching the principal funds directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is considered safe as Russia is subject to sanctions and the earnings are not Russian sovereign property.

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

There are at the moment two EU options seeking to furnishing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• One is to secure the capital on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were originally held in securities but have now largely turned into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and claims it is convinced it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

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

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

The EU ambassadors are planning 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.

Why Belgium is Remains On Board

Belgium is insistent it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being left to handle the repercussions if things go wrong.

A typically divided political landscape 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 about €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium worries about an additional danger of being exposed to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would violate 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 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 become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to secure ironclad assurances for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and politically realistic solution".

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

While Russia is insistent its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

An early draft of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving