Russia Hits Back at Europe's Scheme to Loan Immobilized Moscow's Cash to Kyiv

Kyiv remains facing a severe shortage of cash to sustain its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the following biennium lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Employ Moscow's Funds, Assert Ukraine and the EU

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

The EU and Ukraine maintain that money should be used to rebuild what Russia has laid waste to: The European Commission terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "enable Ukraine to protect itself successfully against subsequent Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has refrained from touching the principal funds directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed safe as Russia is under sanction and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options designed to supplying Ukraine with €90bn, to finance a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely matured into cash. That funding is an asset of Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is convinced it has dealt with them.

The plan is for Belgium to be safeguarded with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear suffer a loss of its own assets in Russia, the loss would be compensated 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 key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote unanimously every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an special provision 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.

Why Belgium is Remains Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being left to handle the repercussions if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange sufficient guarantees for the loan itself, Belgium fears an added risk of being vulnerable to extra damages or penalties.

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

"Banks need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to secure ironclad assurances for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a fiscally viable and practically possible 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 subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about future co-operation.

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