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

Ukraine is depleting its financial resources to keep going its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Utilize Moscow's Funds, Argue Ukraine and the EU

In total, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that those funds should be used to rebuild what Russia has devastated: EU officials calls it a "reparations loan" 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 reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

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

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

Euroclear also has an estimated €16-17bn locked 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 refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

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

Until now the EU has held off touching the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• One is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly matured into cash. That funding is Euroclear property deposited at the European Central Bank.

The EU's executive recognizes Belgium has valid worries and says it is confident it has dealt with them.

The plan is for Belgium to be shielded with a guarantee applying to all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be accepted 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 for the foreseeable future.

Until now they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is adamant it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the repercussions if things go wrong.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

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

"Lenders need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get ironclad guarantees for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most economically realistic and politically achievable solution".

"It is a decisive moment 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".

Although Russia is insistent its money should not be accessed, there are added concerns among European figures that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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