Russia Retaliates at Europe's Plan to Loan Immobilized Russian Cash to Kyiv

Ukraine is facing a severe shortage of cash to sustain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the answer to addressing Ukraine's funding gap of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to sign that off at their Brussels summit next week.

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

'Appropriate' to Employ Russia's Assets, Argue Kyiv and Brussels

In total, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv maintain that money should be used to reconstruct what Russia has destroyed: The European Commission terms it a "reparations loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be burdened by an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted 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?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can support.

Previously 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 amounted to €3.7bn. From a legal standpoint, using the interest 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 declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• Option one is to secure the capital on financial markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly turned into cash. That capital is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has justified fears and says it is convinced it has resolved them.

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

Should 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.

If Russia went after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being shouldering the repercussions 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 other European officials.

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

While the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an further exposure of being subject to extra fines or liabilities.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure water-tight protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and politically realistic solution".

"It is a decisive moment for us," warns 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 insistent its money should not be used, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has indicated 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 potential collaboration.

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