Russia Hits Back at Europe's Scheme to Loan Immobilized Moscow's Funds to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy, after close to 48 months of Russia's full-scale war.

For Europe, the solution to addressing Kyiv's budget hole of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

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

All told, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that that capital should be used to restore what Russia has laid waste to: Brussels 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 devastated – and that that capital then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "help Ukraine to defend itself efficiently against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire prior to next Thursday's summit to come up with a arrangement that Belgium can support.

Previously the EU has held off using the assets themselves directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is deemed safe as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to cover a large portion of its funding needs.

• Option one is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now largely matured into cash. That money is Euroclear property located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any judgment 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 for the foreseeable future.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Still Not Convinced

Brussels is insistent it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the consequences if things go wrong.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to secure enough guarantees for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

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

"Lenders need to adhere to stability regulations 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 fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and politically achievable solution".

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

While Russia is unyielding its money should not be used, there are additional apprehensions among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about possible partnership.

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