Moscow Hits Back at Europe's Scheme to Lend Immobilized Moscow's Cash to Ukraine

Kyiv remains depleting its financial resources to keep going its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to plugging Ukraine's financial shortfall of €135.7bn for the following biennium is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to sign that off at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Russia's Funds, Argue European and Ukrainian Officials

Overall, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that those funds should be used to rebuild what Russia has destroyed: Brussels terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

Russia's court action was foreseen 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 backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

The EU is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

So far the EU has avoided touching the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is deemed less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• One is to raise the money on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now predominantly been converted into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is confident it has resolved them.

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

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

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

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the repercussions if things go wrong.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange adequate protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

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

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad protections for Euroclear."

The European Union Under Pressure from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the economically realistic and politically realistic solution".

"It's a matter of destiny for us," warns 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 additional apprehensions among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

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

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