Russia Retaliates at Europe's Plan to Lend Frozen Moscow's Cash to Kyiv

Kyiv remains depleting its cash to keep going its military and economy, after nearly four years of the ongoing invasion by Moscow.

For Europe, the answer to filling Ukraine's funding gap of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels seek to sign that off at their EU leaders' conference next week.

Russian officials caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Employ Russia's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has destroyed: The European Commission refers to it as a "reparations loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It's only fair 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 states the assets will "allow Ukraine to defend itself effectively against any future Russian attacks".

Russia's court action was expected in Brussels. But it is not just Moscow that is unhappy.

Belgium is concerned it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

Euroclear also has an approximate €16-17bn locked 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 reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire before next Thursday's summit to finalize a compromise that Belgium can support.

Previously the EU has refrained from accessing the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options aimed at furnishing Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to borrow the funds on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice 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.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now mostly turned into cash. That capital is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and says it is convinced it has dealt with them.

The scheme is for Belgium to be safeguarded 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 ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree 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 renew the freeze, which could have meant a ongoing 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 "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and is concerned about being shouldering the fallout if things do not work out.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium fears an further exposure of being vulnerable to extra fines or liabilities.

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

"Banks need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a fiscally viable and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

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

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about potential collaboration.

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