Moscow Responds at the EU's Proposal to Lend Immobilized Moscow's Cash to Ukraine

Ukraine is facing a severe shortage of funding to sustain its military and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the remedy to plugging Kyiv's budget hole of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Appropriate' to Use Russia's Funds, Assert Kyiv and Brussels

Overall, Russia has roughly €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that that capital should be used to restore what Russia has laid waste to: EU officials refers to it as a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is worried it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the international financial system".

Euroclear also has an estimated €16-17bn locked 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 reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire ahead of next Thursday's summit to come up with a compromise that Belgium can agree to.

Previously the EU has refrained from accessing the assets themselves directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered safe as Russia is under sanction and the proceeds are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to furnishing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• Option one is to borrow the funds on financial markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and states it is assured it has resolved them.

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

If Euroclear face a financial hit 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 accepted in the EU.

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

Heretofore they have had to vote unanimously every six months to extend the freeze, which could have meant a repeated 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 "clear risk to the economic security of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is insistent it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and worries about being forced to deal with the repercussions if things fail.

A typically 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.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure adequate assurances for the loan itself, Belgium is concerned about an added risk of being exposed to extra damages or penalties.

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

"Banks need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the financially feasible and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be used, there are added concerns among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace plan.

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

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