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

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

In the view of European leaders, the solution to addressing Ukraine's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Use Russia's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has destroyed: Brussels terms it a "reparations loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".

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

The Belgian government is anxious it will be burdened by an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister 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 refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

Brussels is under pressure before next Thursday's summit to agree on a compromise that Belgium can agree to.

Previously the EU has refrained from touching the principal funds directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as safe as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were originally held in bonds but have now largely matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is assured it has addressed them.

The plan is for Belgium to be protected with a assurance applying to all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit 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 enforced in the EU.

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

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning 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 financial well-being of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is insistent it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being left to handle the repercussions if things go wrong.

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

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

Although the EU might be able to obtain adequate protections for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the economically realistic and practically possible 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 next. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working 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 frozen assets being used by the US for reconstruction, with the US {taking|receiving