Moscow Retaliates at Europe's Plan to Lend Frozen Moscow's Funds to Kyiv

Ukraine is depleting its cash to keep going its military and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's budget hole of €135.7bn for the coming 24 months lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders aim to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Russia's Assets, Argue European and Ukrainian Officials

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

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has destroyed: Brussels calls it a "reparations loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

Russia's court action was foreseen in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be burdened by an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted 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?

Brussels is under pressure prior to next Thursday's summit to finalize a solution that Belgium can agree to.

Until now the EU has refrained from touching the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed less risky as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were at first held in securities but have now predominantly matured into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and claims it is assured it has addressed them.

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

If Euroclear incur losses 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.

Should Russia targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is insistent it remains a committed partner of Ukraine, but identifies legal risks in the plan and fears being forced to deal with the consequences if things fail.

A usually 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.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an added risk of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute protections for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

There is no time to lose, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most financially feasible and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to finalize the deal 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 employ Russia's immobilized billions in another way, as part of its own peace plan.

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 engaging with Russia about future co-operation.

An initial document of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving