Moscow Retaliates at the EU's Scheme to Lend Immobilized Russian Cash to Ukraine

Ukraine is depleting its financial resources to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Employ Russia's Funds, Say Ukraine and the EU

In total, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that those funds 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 bolster Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz states the assets will "help Ukraine to shield itself effectively against 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 left with an huge bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to agree on a arrangement that Belgium can support.

Previously the EU has avoided accessing the assets themselves directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is seen as less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to raise the money on the markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has resolved them.

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

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

In the event that Russia took legal action against 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 immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an special provision 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.

Why Belgium is Not Yet Convinced

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the consequences if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to comply with stability regulations and shouldn't concentrate risk. 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 go wrong it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

Europe Under Pressure from All Sides

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the economically realistic and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 adamant its money should not be used, there are added concerns among European figures that the US may want to employ Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery 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 referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving