Russia Retaliates at Europe's Plan to Loan Frozen Russian Funds to Ukraine

Kyiv remains facing a severe shortage of funding to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Kyiv's funding gap of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Utilize Moscow's Funds, Argue Kyiv and Brussels

All told, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to restore what Russia has destroyed: The European Commission terms it a "reparations loan" and has proposed a plan to support Ukraine's economy to the tune of €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," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

The Belgian government is anxious it will be burdened by an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

Brussels is working to the wire before next Thursday's summit to come up with a solution that Belgium can support.

So far the EU has refrained from using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered permissible as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to borrow the funds on the markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly been converted into cash. That money is owned by Euroclear located within the European Central Bank.

The European Commission accepts Belgium has valid worries and states it is assured it has resolved them.

The plan is for Belgium to be safeguarded with a guarantee encompassing all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit 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.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

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 set 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 Convinced

Belgium is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and worries about being left to handle the fallout if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €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 enough guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things fail it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute guarantees for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most financially feasible and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about potential collaboration.

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