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

Kyiv remains facing a severe shortage of funding to maintain its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Employ Moscow's Funds, Say European and Ukrainian Officials

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

European and Ukrainian authorities argue that that capital should be used to restore what Russia has devastated: The European Commission terms it a "loan for reparations" and has proposed a plan to bolster 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 Ukraine's," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to defend itself effectively against future Russian attacks".

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

Authorities in Brussels is anxious it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues 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 "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

The EU is under pressure before next Thursday's summit to finalize a arrangement that Belgium can accept.

Until now the EU has refrained from accessing the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as safe as Russia is sanctioned and the returns are not Russian sovereign property.

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

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to borrow the funds on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

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

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

Should Euroclear suffer a loss of its own assets in Russia, the loss would be compensated 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 recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and is concerned about being shouldering the consequences if things go wrong.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €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 adequate protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to secure ironclad protections for Euroclear."

EU Leaders Under Pressure from All Sides

There is no time to lose, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic and practically possible solution".

"It is a decisive moment for us," states 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 insistent its money should not be accessed, there are additional apprehensions among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

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