Moscow Retaliates at Europe's Scheme to Lend Frozen Moscow's Cash to Kyiv

Ukraine is facing a severe shortage of financial resources to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Use Russia's Funds, Argue European and Ukrainian Officials

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

Brussels and Kyiv maintain that money should be used to rebuild what Russia has devastated: The European Commission refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

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

Belgium is concerned it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has refrained from accessing the assets themselves directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is considered less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to finance a large portion of its financial requirements.

• One is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a consensus by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now predominantly matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and says it is confident it has dealt with them.

The scheme is for Belgium to be shielded with a insurance 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.

If Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is firm it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and is concerned about being left to handle the consequences if things fail.

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

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so important for Belgium to secure water-tight protections for Euroclear."

The European Union Facing Strain from Every Direction

Time is of the essence, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic 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 afterwards. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own peace initiative.

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

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