Russia Retaliates at Europe's Scheme to Lend Immobilized Russian Assets to Kyiv

Ukraine is depleting its cash to maintain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the answer to plugging Kyiv's funding gap of €135.7bn for the following biennium is found in frozen Russian assets sitting in 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 act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Use Russia's Funds, Assert Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has devastated: The European Commission calls it a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself efficiently against future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has held off touching the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed safe as Russia is under sanction and the returns 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 resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

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

• One is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be problematic when two member states oppose 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 money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is confident it has resolved them.

The plan is for Belgium to be safeguarded 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, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are set to approve 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 continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Brussels is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being left to handle the consequences if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.

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

"Banks need to comply with prudential rules 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 secure. And if things turn sour it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get water-tight guarantees for Euroclear."

Europe Under Pressure from Every Direction

Time is of the essence, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and politically achievable solution".

"It's a matter of destiny for us," says 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 succeed in a week's time".

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

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving