Russia Retaliates at the EU's Plan to Loan Immobilized Moscow's Funds to Kyiv

Kyiv remains running out of funding to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to plugging Kyiv's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to sign that off at their Brussels summit next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Moscow's Funds, Say Ukraine and the EU

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

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is anxious it will be burdened by an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Until now the EU has avoided accessing the frozen capital directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is considered safe as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to furnishing Ukraine with €90bn, to finance a majority of its funding needs.

• One is to raise the money on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now mostly matured into cash. That funding is an asset of Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is convinced it has addressed them.

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

Should Euroclear suffer a loss 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.

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

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is firm it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the fallout if things do not work out.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an additional danger of being subject to extra legal costs.

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

"Financial institutions need to adhere to prudential rules and shouldn't put all their eggs in one basket. 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 ironclad assurances for Euroclear."

The European Union 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 argue the proposal to use Russian funds is "the most financially feasible and practically possible 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 subsequently. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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