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

Kyiv remains depleting its financial resources to maintain its military and economy, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to addressing Kyiv's budget hole of €135.7bn for the following biennium lies in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Utilize Russia's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to restore what Russia has destroyed: The European Commission terms it a "loan for reparations" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

Brussels is racing against time before next Thursday's summit to agree on a arrangement that Belgium can agree to.

Previously the EU has held off using the assets themselves directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as less risky as Russia is sanctioned and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to supplying Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly been converted into cash. That money is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is convinced it has dealt with them.

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

If Euroclear face a financial hit 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 took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things fail.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an further exposure 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 follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so important for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most fiscally viable and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be touched, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about future co-operation.

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