Russia Retaliates at the EU's Scheme to Lend Immobilized Russian Assets to Ukraine

Ukraine is facing a severe shortage of funding to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's budget hole of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Utilize Russia's Assets, Assert European and Ukrainian Officials

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

The EU and Ukraine argue that that capital should be used to rebuild what Russia has laid waste to: EU officials calls it a "reparations loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself efficiently against any future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

The leader of Belgium 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 "carries significant risks" for his country.

Explaining the EU's Proposal?

Brussels is racing against time before next Thursday's summit to agree on a compromise that Belgium can agree to.

Previously the EU has refrained from using the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered permissible as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has valid worries and claims it is confident it has resolved them.

The proposal is for Belgium to be safeguarded with a assurance encompassing 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 clearing house which are in the EU.

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

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an emergency clause 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 Not Yet Convinced

Belgium is firm it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being left to handle the fallout if things go wrong.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an added risk of being exposed to extra damages or penalties.

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

"Financial institutions need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure water-tight assurances for Euroclear."

The European Union Facing Strain from Every Direction

There is no time to lose, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most financially feasible and politically achievable solution".

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

Although Russia is adamant its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to use Russia's immobilized billions for another purpose, 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 mindful the US has been engaging with Russia about future co-operation.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving