Moscow Retaliates at the EU's Scheme to Loan Frozen Russian Cash to Kyiv

Ukraine is facing a severe shortage of funding to keep going its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to addressing Ukraine's budget hole of €135.7bn for the following biennium rests with Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

Russian officials 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 final decision is made.

'Only Fair' to Use Moscow's Funds, Assert Kyiv and Brussels

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

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

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be burdened by an massive 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 immobilised in Russia.

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

Brussels is working to the wire prior to next Thursday's summit to come up with a arrangement that Belgium can accept.

Until now the EU has avoided accessing the assets themselves directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed safe 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 had trouble trying to make up the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• Option one is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and states it is confident it has resolved them.

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

If Euroclear face a financial hit 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 targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains Satisfied

Brussels is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and worries about being left to handle the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely 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 save Euroclear. That's an additional reason why it's so vital for Belgium to obtain ironclad protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the financially feasible and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about future co-operation.

An early draft of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving