Moscow Retaliates at the EU's Scheme to Lend Frozen Moscow's Assets to Ukraine
Kyiv remains facing a severe shortage of funding to sustain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.
From the EU's perspective, the remedy to plugging Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials seek to sign that off at their Brussels summit next week.
Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.
'Just' to Utilize Russia's Assets, Say European and Ukrainian Officials
In total, Russia has roughly €210bn of its funds blocked in the EU, and €185bn of that is held by Euroclear.
Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has destroyed: Brussels calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.
"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.
Germany's leader Friedrich Merz states the assets will "help Ukraine to defend itself efficiently against any future Russian attacks".
Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is dissatisfied.
The Belgian government is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the international financial system".
Euroclear also has an estimated €16-17bn frozen in Russia.
Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.
Explaining the EU's Strategy?
The EU is under pressure prior to next Thursday's summit to finalize a compromise that Belgium can support.
Until now the EU has refrained from using the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.
But foreign defense assistance for Ukraine has fallen significantly 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 currently two EU plans seeking to supplying Ukraine with €90bn, to cover a large portion of its financial requirements.
- Option one is to raise the money on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
- This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely turned into cash. That capital is an asset of Euroclear held in the European Central Bank.
Brussels' executive arm accepts Belgium has justified fears and says it is confident it has resolved them.
The plan is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.
If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.
If Russia took legal action against Belgium itself, any ruling 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 for the foreseeable future.
Until now 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 continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.
Why Belgium is Remains Satisfied
Brussels is adamant it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being left to handle the consequences if things do not work out.
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 about €565bn – imagine 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 arrange sufficient assurances for the loan itself, Belgium worries about an additional danger of being exposed to extra fines or liabilities.
Prof Colaert also argues the requirement for Euroclear to provide a loan to the EU would breach EU banking regulations.
"Financial institutions need to adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.
"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute protections for Euroclear."
EU Leaders Facing Strain from Every Direction
The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and practically possible solution".
"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, 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 used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.
Zelensky has stated Ukraine is working with Europe and the US on a rebuilding 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
