Moscow Retaliates at the EU's Proposal to Lend Immobilized Russian Cash to Ukraine

Ukraine is depleting its financial resources to sustain its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the remedy to filling Ukraine's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Employ Moscow's Assets, Assert Kyiv and Brussels

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has laid waste to: The European Commission terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €90bn.

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

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

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

The Belgian government is anxious it will be left with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

The EU is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has avoided using the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is considered safe as Russia is subject to sanctions and the returns are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to borrow the funds on the markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now mostly been converted into cash. That money is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is confident it has resolved them.

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

Should Euroclear suffer a loss 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 took legal action against Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

Previously 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 special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is adamant it remains a strong supporter of Ukraine, but identifies legal risks in the plan and is concerned about being forced to deal with the repercussions if things do not work out.

A normally partisan political environment 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 about €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain enough protections for the loan itself, Belgium fears an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. 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 secure water-tight guarantees for Euroclear."

The European Union Under Pressure from All Sides

Time is of the essence, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the economically realistic and politically realistic solution".

"This is a crucial test 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 succeed in a week's time".

While Russia is insistent its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace plan.

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

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