Moscow Retaliates at Europe's Plan to Lend Immobilized Moscow's Cash to Kyiv

Ukraine is depleting its financial resources to keep going its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Kyiv's funding gap of €135.7bn for the following biennium is found in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials hope to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Utilize Russia's Assets, Argue Kyiv and Brussels

In total, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv maintain that money should be used to rebuild what Russia has laid waste to: EU officials terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is concerned.

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

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted 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 racing against time prior to next Thursday's summit to agree on a compromise that Belgium can agree to.

Until now the EU has avoided touching the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is deemed permissible as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans designed to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to secure the capital on capital markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly turned into cash. That funding is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is assured it has addressed them.

The plan is for Belgium to be safeguarded 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, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning 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.

The Reasons Belgium is Remains Satisfied

The Belgian government is firm it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and fears being shouldering the consequences if things fail.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to carry 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 is concerned about an further exposure of being subject to extra damages or penalties.

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

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

"Why do we have 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 a further cause why it's so important for Belgium to secure water-tight protections for Euroclear."

Europe In a Difficult Position from Every Direction

Time is of the essence, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a economically realistic and politically achievable solution".

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

While Russia is unyielding its money should not be touched, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about future co-operation.

A preliminary version of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving