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

Ukraine is depleting its cash to maintain its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the following biennium lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to sign that off at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Use Moscow's Assets, Argue Ukraine and the EU

In total, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv maintain that those funds should be used to reconstruct what Russia has destroyed: The European Commission refers to it as a "loan for reparations" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself successfully against any future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is concerned.

Belgium is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept 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 come up with a compromise that Belgium can accept.

So far the EU has avoided using the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• Option one is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now mostly turned into cash. That money is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has valid worries and claims it is convinced it has dealt with them.

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

Should Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Brussels is insistent it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being forced to deal with the repercussions if things do not work out.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from European colleagues.

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

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad guarantees for Euroclear."

The European Union Under Pressure from All Sides

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a fiscally viable and politically achievable solution".

"It's a matter of destiny 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 finalize the deal in a week's time".

While Russia is unyielding its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been holding discussions with Russia about future co-operation.

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