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

Kyiv remains depleting its cash to maintain its armed forces and economy, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the coming 24 months is found in Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Use Russia's Assets, Argue Kyiv and Brussels

In total, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that that capital should be used to restore what Russia has devastated: EU officials calls it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz argues the assets will "help Ukraine to shield itself successfully against future Russian attacks".

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

The Belgian government is worried it will be saddled with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the world's financial order".

Euroclear also has an roughly €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 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?

The EU is racing against time prior to next Thursday's summit to come up with a arrangement that Belgium can agree to.

Previously the EU has held off accessing the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered permissible as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• One is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

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

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

Should Euroclear face a financial hit 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 went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the consequences if things do not work out.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. 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 stable. And if things go wrong it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable and practically possible solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

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

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 holding discussions with Russia about future co-operation.

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