Moscow Hits Back at Europe's Plan to Lend Frozen Moscow's Funds to Kyiv

Kyiv remains facing a severe shortage of cash to maintain its military and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the answer to plugging Kyiv's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to restore what Russia has devastated: The European Commission calls it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to protect itself successfully against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate 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.

The Details of the EU's Proposal?

The EU is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has refrained from accessing the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at providing Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly matured into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is confident it has dealt with them.

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

Should Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

Heretofore 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 set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and fears being left to handle the consequences if things do not work out.

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

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

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

"Banks need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to secure absolute guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the economically realistic and practically possible 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 reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions for another purpose, 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 holding discussions with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving