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

Ukraine is depleting its funding to maintain its military and economy, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the remedy to plugging Ukraine's funding gap of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their EU leaders' conference next week.

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

'Appropriate' to Employ Russia's Assets, Say Ukraine and the EU

In total, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has devastated: Brussels refers to it as a "reparations loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself effectively against subsequent Russian attacks".

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

The Belgian government is worried it will be left with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with 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 "carries significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is working to the wire prior to next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has held off accessing the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is considered less risky as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at furnishing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now mostly been converted into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is confident it has dealt with them.

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

If Euroclear incur losses 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.

If Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Belgium is firm it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the fallout if things do not work out.

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

"Belgium is a small economy. Belgian GDP is around €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain enough assurances for the loan itself, Belgium is concerned about an further exposure of being subject to extra damages or penalties.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

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

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

Europe Facing Strain from All Sides

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving