Moscow Retaliates at the EU's Plan to Lend Frozen Moscow's Funds to Ukraine

Ukraine is running out of cash to keep going its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope 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 declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Moscow's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities contend that those funds should be used to restore what Russia has devastated: Brussels terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

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

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

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

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

Until now the EU has avoided touching the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options aimed at furnishing Ukraine with €90bn, to finance a large portion of its budgetary necessities.

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now mostly turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has valid worries and states it is convinced it has resolved them.

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

Should Euroclear suffer a loss 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.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is firm it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being left to handle the repercussions if things go wrong.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to secure adequate protections for the loan itself, Belgium is concerned about an further exposure of being subject to extra fines or liabilities.

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

"Lenders need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly 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 save Euroclear. That's a further cause why it's so important for Belgium to get absolute assurances for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

Time is of the essence, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most fiscally viable and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are further worries among European figures that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about future co-operation.

An initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving