Moscow Retaliates at the EU's Scheme to Lend Immobilized Russian Cash to Kyiv

Kyiv remains running out of cash to sustain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

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

'Only Fair' to Use Moscow's Assets, Say Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has devised a plan to prop up 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 that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister 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 "carries significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is racing against time before next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is seen as less risky as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the deficit 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 cover a large portion of its financial requirements.

• The first is to raise the money on financial markets, backed 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 difficult when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now predominantly matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is assured it has addressed them.

The scheme is for Belgium to be protected with a assurance covering 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 settlement agency which are in the EU.

Should Russia targeted Belgium itself, any judgment 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.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Convinced

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

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to obtain water-tight guarantees for Euroclear."

Europe Under Pressure from Every Direction

Time is of the essence, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the financially feasible and politically realistic 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 finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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