Russia Retaliates at Europe's Scheme to Lend Immobilized Russian Cash to Ukraine

Ukraine is running out of financial resources to sustain its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

For Europe, the remedy to plugging Kyiv's funding gap of €135.7bn for the next two years is found in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

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

'Only Fair' to Employ Moscow's Assets, Say Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to reconstruct what Russia has laid waste to: Brussels terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to shield itself efficiently against future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate 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 Proposal?

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

So far the EU has refrained from accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is considered less risky as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to secure the capital on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly been converted into cash. That capital is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and states it is confident it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency 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.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being left to handle the fallout if things go wrong.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

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

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

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

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain ironclad protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 insistent its money should not be used, there are added concerns 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 coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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