Moscow Retaliates at Europe's Scheme to Loan Frozen Moscow's Funds to Ukraine

Kyiv remains running out of cash to maintain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Kyiv's budget hole of €135.7bn for the coming 24 months lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an act of theft, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' 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 held by Euroclear.

The EU and Ukraine maintain that those funds should be used to restore what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself efficiently against any future Russian attacks".

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

Belgium is worried it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the world's financial order".

Euroclear also has an approximate €16-17bn immobilised in Russia.

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse 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?

Brussels is under pressure ahead of next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has avoided accessing the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is seen as less risky as Russia is under sanction and the proceeds are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at providing Ukraine with €90bn, to finance a majority of its funding needs.

• One is to raise the money on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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.

If Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

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

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

The Reasons Belgium is Still Not Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but identifies legal risks in the plan and fears being shouldering the fallout if things fail.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear 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 worries about an further exposure of being subject to extra legal costs.

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

"Banks need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the economically realistic and practically possible solution".

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

While Russia is insistent its money should not be used, there are added concerns among European figures that the US may want to deploy Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

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