Moscow Retaliates at the EU's Scheme to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is facing a severe shortage of financial resources to sustain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to sign that off at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Utilize Russia's Assets, Argue Kyiv and Brussels

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

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has laid waste to: EU officials terms it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to come up with a compromise that Belgium can support.

Until now the EU has held off using the assets themselves 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 deemed permissible as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to furnishing Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• Option one is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely turned into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission acknowledges Belgium has justified fears and claims it is assured it has dealt with them.

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

If Euroclear suffer a loss 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 went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an emergency clause 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 Still Not On Board

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

A typically fractured political scene 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 – imagine if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an added risk of being subject to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling 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 fail it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain absolute assurances for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

There is no time to lose, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a fiscally viable and politically achievable solution".

"This is a crucial test for us," states 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".

While Russia is adamant its money should not be accessed, there are added concerns among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about future co-operation.

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