Russia Responds at the EU's Scheme to Lend Immobilized Moscow's Funds to Ukraine

Ukraine is depleting its financial resources to sustain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to filling Ukraine's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Employ Russia's Funds, Assert European and Ukrainian Officials

All told, Russia has approximately €210bn of its funds blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine maintain that money should be used to restore what Russia has laid waste to: Brussels refers to it as a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds 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 "allow Ukraine to defend itself successfully against future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be burdened by an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has avoided touching the frozen capital directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as permissible as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now mostly matured into cash. That money is owned by Euroclear located within the European Central Bank.

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

The plan is for Belgium to be safeguarded with a guarantee 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.

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be enforced in the EU.

As an important step, 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 all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

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

The Reasons Belgium is Remains Convinced

Brussels is insistent it remains a strong supporter of Ukraine, but perceives legal risks in the plan and fears being shouldering the fallout if things do not work out.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an further exposure of being exposed to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the financially feasible and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about potential collaboration.

A preliminary version 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