Russia Retaliates at the EU's Plan to Loan Frozen Moscow's Assets to Kyiv

Ukraine is facing a severe shortage of financial resources to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Employ Moscow's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself effectively against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be burdened by an massive bill if it all fails, 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.

Belgium's PM 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 left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is under pressure prior to next Thursday's summit to agree on a solution that Belgium can accept.

Previously the EU has avoided touching the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is deemed safe as Russia is under sanction and the returns are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• One is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now predominantly been converted into cash. That capital is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is assured it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

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

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the consequences if things go wrong.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to secure ironclad guarantees for Euroclear."

The European Union Under Pressure from All Sides

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable and politically realistic solution".

"This is a crucial test 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 reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among European figures that the US may want to employ Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been holding discussions with Russia about future co-operation.

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