Moscow Retaliates at Europe's Plan to Loan Immobilized Russian Cash to Kyiv

Kyiv remains facing a severe shortage of financial resources to maintain its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the coming 24 months lies in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Utilize Moscow's Funds, Say Kyiv and Brussels

Overall, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has destroyed: Brussels calls it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself effectively against future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is concerned it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure ahead of next Thursday's summit to come up with a compromise that Belgium can agree to.

Previously the EU has held off using the assets themselves directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• The first is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly been converted into cash. That funding is Euroclear property held in the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and states it is assured it has addressed them.

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

Should Euroclear face a financial hit 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.

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

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote all together every six months to renew 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 economic interests of the union" continues.

Why Belgium is Still Not Satisfied

The Belgian government is adamant it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the fallout if things do not work out.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"The Belgian economy is not large. 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 sufficient assurances for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Banks need to follow prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get absolute assurances for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically realistic solution".

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

Although Russia is unyielding its money should not be touched, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace initiative.

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

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