Moscow Responds at Europe's Plan to Lend Frozen Russian Cash to Ukraine

Kyiv remains depleting its funding to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels aim to sign that off at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Employ Russia's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to restore what Russia has laid waste to: Brussels calls it a "reparations loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to protect itself effectively against future Russian attacks".

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

Belgium is anxious it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

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

Until now the EU has held off using the principal funds directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is considered permissible as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to finance a large portion of its funding needs.

• One is to borrow the funds on financial markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now largely turned into cash. That capital is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and claims it is confident it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset 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 enforced in the EU.

As an important step, EU ambassadors are poised to endorse 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 renew the freeze, which could have meant a ongoing risk to Belgium.

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

Why Belgium is Still Not On Board

The Belgian government is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is about €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

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

"Banks need to comply with capital and liquidity requirements and shouldn't concentrate risk. 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 turn sour it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," warns 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 succeed in a week's time".

Although Russia is unyielding its money should not be used, there are additional apprehensions among European figures that the US may want to use Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about possible partnership.

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