Moscow Retaliates at Europe's Scheme to Lend Immobilized Russian Assets to Ukraine

Ukraine is facing a severe shortage of funding to sustain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the answer to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Russia's Funds, Assert Ukraine and the EU

Overall, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "loan for reparations" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

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

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

The Belgian government is concerned it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire before next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has held off accessing the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically 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 proposals designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• Option one is to borrow the funds on financial markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now largely matured into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and claims it is assured it has addressed them.

The scheme is for Belgium to be protected with a assurance 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 took legal action against Belgium itself, any decision 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 permanently.

Heretofore they have had to vote all together every six months to renew 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 Not Yet On Board

Brussels is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being left to handle the consequences if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured 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," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium is concerned about an further exposure of being subject to extra legal costs.

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

"Lenders need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad assurances for Euroclear."

Europe Facing Strain from Multiple Fronts

Time is of the essence, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically realistic solution".

"It's a matter of destiny for us," states 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".

Although Russia is adamant its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own diplomatic proposal.

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

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving