Moscow Responds at Europe's Scheme to Loan Immobilized Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the solution to plugging Kyiv's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Use Moscow's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is worried it will be burdened by an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with 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 "presents significant risks" for his country.

What is the EU's Proposal?

Brussels is racing against time before next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has refrained from touching the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is sanctioned and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to finance a large portion of its funding needs.

• One is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly matured into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is convinced it has resolved them.

The proposal is for Belgium to be protected 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 settlement agency which are in the EU.

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains On Board

Brussels is insistent it remains a strong supporter of Ukraine, but perceives legal risks in the plan and worries about being shouldering the repercussions if things fail.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to obtain enough assurances for the loan itself, Belgium fears an further exposure of being vulnerable to extra legal costs.

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

"Banks need to follow stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

There is no time to lose, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the economically realistic and practically possible 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 finalize the deal in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

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

A preliminary version of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving