Moscow Hits Back at the EU's Proposal to Loan Immobilized Moscow's Funds to Ukraine

Kyiv remains depleting its cash to maintain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to plugging Kyiv's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Employ Russia's Assets, Assert Ukraine and the EU

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

Brussels and Kyiv argue that that capital should be used to restore what Russia has devastated: Brussels refers to it as a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is worried it will be left with an massive bill if it all backfires, 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 given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has held off touching the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now mostly been converted into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and says it is confident it has dealt with them.

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

If 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.

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be recognized 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 repeated risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the fallout if things fail.

A normally 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 is a small economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain enough protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these banking laws? 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 a further cause why it's so important for Belgium to secure water-tight assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

The situation is urgent, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically achievable solution".

"It's a matter of destiny for us," says 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 succeed in a week's time".

While Russia is unyielding its money should not be accessed, there are additional apprehensions among EU officials that the US may want to use Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about future co-operation.

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