Moscow Retaliates at the EU's Proposal to Loan Immobilized Russian Cash to Ukraine

Ukraine is depleting its funding to sustain its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the solution to plugging Ukraine's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Employ Moscow's Assets, Say European and Ukrainian Officials

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

European and Ukrainian authorities contend that money should be used to reconstruct what Russia has destroyed: The European Commission terms it a "reconstruction loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself effectively against future Russian attacks".

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

Belgium is anxious it will be burdened by an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has not excluded legal action if it "poses 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 come up with a compromise that Belgium can support.

Previously the EU has refrained from accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed less risky as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at supplying Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to raise the money on financial markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is assured it has resolved them.

The proposal is for Belgium to be protected with a insurance encompassing 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 settlement agency which are in the EU.

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

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

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Remains On Board

The Belgian government is firm it remains a committed partner of Ukraine, but identifies legal risks in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure enough guarantees for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

Prof Colaert also contends the requirement for Euroclear to issue credit 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 instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad guarantees for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

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