Russia Retaliates at Europe's Proposal to Lend Frozen Moscow's Cash to Ukraine

Ukraine is running out of cash to maintain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the next two years rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

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

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself efficiently against subsequent Russian attacks".

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

Belgium is anxious it will be burdened by an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to agree on a arrangement that Belgium can support.

Previously the EU has refrained from touching the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and claims it is convinced it has resolved them.

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

Should Euroclear suffer a loss 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 went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the consequences if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to secure adequate assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

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

"Financial institutions need to follow prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to obtain absolute protections for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be accessed, there are added concerns among EU officials that the US may want to deploy Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about potential collaboration.

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