Moscow Retaliates at the EU's Scheme to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is running out of funding to maintain its armed forces and economy, after almost four years of Russia's full-scale war.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels aim to sign that off at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Moscow's Assets, Assert European and Ukrainian Officials

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

Brussels and Kyiv contend that those funds should be used to reconstruct what Russia has devastated: Brussels terms it a "reparations loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader 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 unhappy.

The Belgian government is concerned it will be burdened by an enormous bill if it all backfires, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to come up with a solution that Belgium can support.

Previously the EU has avoided accessing the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is deemed permissible as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to cover a majority of its funding needs.

• One is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now predominantly been converted into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and states it is confident it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, 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 all together 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 stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the repercussions if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an additional danger of being subject to extra fines or liabilities.

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

"Lenders need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so important for Belgium to secure ironclad protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the economically realistic and politically achievable solution".

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

Although Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace plan.

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

An early draft of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving