Russia Hits Back at Europe's Plan to Lend Immobilized Moscow's Funds to Ukraine

Kyiv remains running out of funding to maintain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the remedy to addressing Ukraine's budget hole of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Utilize Moscow's Funds, Say Kyiv and Brussels

All told, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that money should be used to reconstruct what Russia has destroyed: Brussels refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

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

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

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, 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 under pressure before next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has refrained from touching the principal funds directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as permissible as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• Option one is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's favored solution but it needs a unanimous vote 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 frozen Russian funds, which were at first held in financial instruments but have now mostly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and claims it is assured it has addressed them.

The scheme is for Belgium to be safeguarded with a insurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously 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 extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

Belgium is adamant 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 divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra legal costs.

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

"Banks need to adhere to stability regulations and shouldn't make one enormous loan. 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 fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most economically realistic 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 next. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are further worries among leaders in Europe that the US may want to use Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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