Russia Responds at the EU's Scheme to Loan Immobilized Moscow's Funds to Kyiv

Ukraine is running out of financial resources to keep going its armed forces and economy, after almost 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 Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials hope to finalize the plan at their EU leaders' conference next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Employ Moscow's Assets, Assert European and Ukrainian Officials

All told, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that those funds should be used to rebuild what Russia has devastated: Brussels calls it a "reparations loan" and has devised a plan to bolster 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 destroyed – and that money then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself efficiently against subsequent Russian attacks".

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

The Belgian government is concerned it will be saddled with an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM 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 Strategy?

Brussels is under pressure ahead of next Thursday's summit to agree on a compromise that Belgium can support.

Previously the EU has avoided accessing the frozen capital directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the shortfall caused by the US decision to all but stop 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.

• One is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly matured into cash. That capital is owned by Euroclear located within the European Central Bank.

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

The proposal is for Belgium to be shielded with a insurance encompassing all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss 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.

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

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

Previously they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Still Not On Board

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

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

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get absolute assurances for Euroclear."

EU Leaders Under Pressure from All Sides

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the financially feasible and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be used, there are further worries among EU officials that the US may want to employ 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 reconstruction fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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