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

Kyiv remains running out of financial resources to maintain its armed forces and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Use Russia's Funds, Argue Ukraine and the EU

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

Brussels and Kyiv maintain that that capital should be used to restore what Russia has devastated: The European Commission calls it a "reconstruction loan" and has devised a plan to support 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 devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against any future Russian attacks".

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

The Belgian government is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

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

So far the EU has held off using the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed safe as Russia is sanctioned and the earnings 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 compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus 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 at first held in securities but have now predominantly matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is confident it has addressed them.

The scheme is for Belgium to be shielded with a insurance 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.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block 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 repeated risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and worries about being forced to deal with the fallout if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

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

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

"Lenders need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to get ironclad protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most fiscally viable and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, 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 unyielding its money should not be used, there are further worries among EU officials that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

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