Moscow Hits Back at Europe's Scheme to Lend Immobilized Russian Funds to Ukraine

Kyiv remains depleting its funding to keep going its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the solution to filling Kyiv's budget hole of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to sign that off at their Brussels summit next week.

Moscow's representatives state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has destroyed: Brussels refers to it as a "loan for reparations" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to shield itself successfully against subsequent Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

Belgium is worried it will be left with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the global financial architecture".

Euroclear also has an approximate €16-17bn immobilised 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 refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire ahead of next Thursday's summit to finalize a arrangement that Belgium can accept.

Until now the EU has held off touching the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

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 largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it demands a consensus 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 Moscow's immobilized capital, which were initially held in securities but have now largely matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is confident it has dealt with them.

The scheme is for Belgium to be safeguarded with a insurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses 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 went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, 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 by consensus every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is insistent it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the consequences if things go wrong.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an added risk of being exposed to extra fines or liabilities.

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to get water-tight guarantees for Euroclear."

EU Leaders Facing Strain from Every Direction

The situation is urgent, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about possible partnership.

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