Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Cash to Ukraine

Kyiv remains running out of funding to maintain its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels hope to sign that off at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Russia's Assets, Assert Ukraine and the EU

Overall, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that that capital should be used to restore what Russia has devastated: EU officials 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 is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is concerned it will be left with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

Brussels is working to the wire ahead of next Thursday's summit to finalize a arrangement that Belgium can agree to.

So far the EU has avoided accessing the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is deemed less risky as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to secure the capital on capital markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now predominantly been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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 went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a constant 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 financial well-being of the union" continues.

Why Belgium is Remains Satisfied

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

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium is concerned about an further exposure of being exposed to extra legal costs.

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

"Financial institutions need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to secure absolute protections for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the fiscally viable and practically possible solution".

"It is a decisive moment 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 insistent its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's blocked funds differently, as part of its own peace plan.

Zelensky has indicated 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 possible partnership.

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