Russia Responds at Europe's Scheme to Lend Immobilized Moscow's Funds to Ukraine

Kyiv remains running out of funding to sustain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Ukraine's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Use Russia's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv argue that money should be used to rebuild what Russia has devastated: The European Commission terms it a "reparations loan" and has devised a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself efficiently against subsequent Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is concerned it will be left with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure ahead of next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has held off using the principal funds directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at supplying Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly matured into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is convinced it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but identifies legal risks in the plan and is concerned about being forced to deal with the repercussions 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 under pressure from other European officials.

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

Although the EU might be able to secure adequate protections for the loan itself, Belgium fears an additional danger of being exposed to extra fines or liabilities.

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

"Banks need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to obtain water-tight protections for Euroclear."

Europe Under Pressure from Every Direction

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

"It is a decisive moment for us," says 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 succeed in a week's time".

Although Russia is unyielding its money should not be used, there are added concerns among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

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

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