Russia Retaliates at Europe's Scheme to Lend Immobilized Russian Cash to Kyiv

Ukraine is facing a severe shortage of funding to sustain its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the solution to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels 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 declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Utilize Moscow's Assets, Argue Kyiv and Brussels

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

The EU and Ukraine maintain that that capital should be used to rebuild what Russia has devastated: EU officials terms it a "loan for reparations" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

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

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

Belgium is worried it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to finalize a solution that Belgium can accept.

Until now the EU has refrained from accessing the assets themselves directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is deemed less risky as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to furnishing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now predominantly been converted into cash. That money is owned by Euroclear held in the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and says it is assured it has dealt with them.

The plan is for Belgium to be protected with a assurance applying to 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 decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously 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 extraordinary measure 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.

Why Belgium is Remains Convinced

Belgium is firm it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being forced to deal with the repercussions if things go wrong.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an additional danger of being vulnerable to extra damages or penalties.

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

"Lenders need to adhere to capital and liquidity requirements and shouldn't concentrate risk. 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 solvent. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most economically realistic and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be used, there are further worries among European figures that the US may want to deploy Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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