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

Kyiv remains facing a severe shortage of financial resources to sustain its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their Brussels summit next week.

Russian officials warn 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 prior to a conclusive plan is made.

'Appropriate' to Employ Moscow's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities argue that money should be used to reconstruct what Russia has destroyed: EU officials refers to it as a "reparations loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to shield itself efficiently against future Russian attacks".

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

Belgium is anxious it will be burdened by an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU 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.

What is the EU's Plan?

Brussels is racing against time prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Until now the EU has avoided touching the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered less risky as Russia is under sanction and the earnings are not property of the Russian state.

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

There are at the moment two EU plans designed to providing Ukraine with €90bn, to finance a large portion of its funding needs.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now mostly matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and says it is convinced it has addressed them.

The scheme is for Belgium to be protected with a guarantee covering 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 clearing house which are in the EU.

If Russia targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

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 planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

Belgium is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the repercussions if things do not work out.

A typically 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.

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

While the EU might be able to obtain enough protections for the loan itself, Belgium fears an additional danger of being subject 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.

"Lenders need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get absolute protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a financially feasible and practically possible 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 finalize the deal in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions 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 frozen assets being used by the US for reconstruction, with the US {taking|receiving