Russia Retaliates at the EU's Scheme to Lend Immobilized Russian Assets to Ukraine

Ukraine is facing a severe shortage of financial resources to maintain its military and economy afloat, after close to 48 months of Russia's full-scale war.

For Europe, the solution to filling Ukraine's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Utilize Moscow's Assets, Assert Kyiv and Brussels

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

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has laid waste to: EU officials calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself effectively against future Russian attacks".

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

The Belgian government is worried it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgium's PM 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 refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials 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 refrained from accessing the frozen capital directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed permissible as Russia is under sanction and the returns are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to 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 largely turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is assured it has dealt with them.

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

If Euroclear suffer a loss 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.

Should Russia went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set 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 security of the union" continues.

Why Belgium is Remains Satisfied

Brussels is firm it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being left to handle the fallout if things go wrong.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

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

While the EU might be able to obtain adequate guarantees for the loan itself, Belgium fears an further exposure of being exposed to extra damages or penalties.

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

"What is the purpose of these bank rules? 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 a further cause why it's so important for Belgium to secure absolute protections for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the financially feasible and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be used, there are additional apprehensions among EU officials that the US may want to employ Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving