Russia Retaliates at Europe's Plan to Loan Immobilized Russian Cash to Ukraine

Kyiv remains running out of financial resources to keep going its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the remedy to plugging Kyiv's funding gap of €135.7bn for the coming 24 months lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Say European and Ukrainian Officials

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

The EU and Ukraine argue that those funds should be used to reconstruct what Russia has laid waste to: The European Commission terms it a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself effectively against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is worried it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has held off accessing the frozen capital directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered less risky as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

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

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were initially held in securities but have now predominantly matured into cash. That money is Euroclear property deposited at the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and says it is assured it has resolved them.

The scheme is for Belgium to be shielded with a guarantee 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 settlement agency which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

Previously 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 security of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the fallout if things do not work out.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just 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 be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

The situation is urgent, caution 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 politically realistic solution".

"This is a crucial test for us," says 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be touched, there are additional apprehensions among EU officials that the US may want to employ 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 rebuilding 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 suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving