Russia Retaliates at the EU's Plan to Lend Immobilized Moscow's Funds to Ukraine

Kyiv remains depleting its financial resources to maintain its military and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to sign that off at their Brussels summit next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Use Moscow's Assets, Assert Ukraine and the EU

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

The EU and Ukraine argue that money should be used to restore what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against future Russian attacks".

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

Belgium is anxious it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to 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 arrangement that Belgium can support.

So far the EU has avoided accessing the frozen capital directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is deemed less risky as Russia is sanctioned and the returns are not Russian sovereign property.

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

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly matured into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is confident it has resolved them.

The plan is for Belgium to be shielded 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 shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the fallout if things fail.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing 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 turn sour it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a economically realistic and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.

An initial document of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving