Moscow Retaliates at the EU's Plan to Loan Immobilized Moscow's Funds to Ukraine

Ukraine is depleting its financial resources to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the remedy to filling Ukraine's funding gap of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Say European and Ukrainian Officials

In total, Russia has roughly €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that that capital should be used to restore what Russia has laid waste to: Brussels terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is worried it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".

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

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

The Details of the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to finalize a compromise that Belgium can support.

Until now the EU has refrained from accessing the frozen capital directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely turned into cash. That capital is an asset of Euroclear located within the European Central Bank.

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

The proposal is for Belgium to be shielded with a guarantee covering all the €210bn of Russian assets in the EU.

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

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore 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 stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and fears being left to handle the repercussions if things do not work out.

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

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

While the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra legal costs.

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

"Banks need to follow stability regulations and shouldn't make one enormous loan. 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 rescue Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight guarantees for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"This is a crucial test 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 succeed in a week's time".

While Russia is insistent its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to use Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about potential collaboration.

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