Moscow Hits Back at the EU's Proposal to Lend Frozen Moscow's Funds to Ukraine

Kyiv remains depleting its cash to sustain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Assets, Say Kyiv and Brussels

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

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has destroyed: EU officials terms it a "loan for reparations" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "destabilise 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 reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is 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.

Previously the EU has avoided accessing the frozen capital directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed less risky as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to cover a majority of its financial requirements.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly turned into cash. That capital is Euroclear property deposited at the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is assured it has dealt with them.

The scheme is for Belgium to be shielded with a guarantee 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.

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning 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.

The Reasons Belgium is Remains Convinced

The Belgian government is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the consequences if things go wrong.

A normally fractured political scene in this case has united 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 – consider if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Banks need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace initiative.

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 future co-operation.

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