Moscow Retaliates at the EU's Plan to Loan Frozen Moscow's Assets to Kyiv

Ukraine is depleting its funding to maintain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

From the EU's perspective, the answer to filling Kyiv's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Use Moscow's Funds, Say Kyiv and Brussels

In total, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself successfully against any future Russian attacks".

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all goes wrong, 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 accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Previously the EU has refrained from accessing 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 profits 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 found it difficult to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• One is to raise the money on the markets, backed by the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly turned into cash. That capital is owned by Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

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

Should Euroclear incur losses 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.

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote all together every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet On Board

Belgium is adamant it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and worries about being forced to deal with the fallout if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"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.

While the EU might be able to arrange enough protections for the loan itself, Belgium worries about an added risk of being exposed to extra legal costs.

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

"Lenders need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to get ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. 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 deploy Russia's blocked funds in another way, as part of its own peace initiative.

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

An initial document of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving