Moscow Hits Back at the EU's Plan to Loan Frozen Russian Cash to Ukraine

Kyiv remains running out of funding to keep going its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to addressing Kyiv's financial shortfall of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to finalize the plan at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Russia's Assets, Say European and Ukrainian Officials

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 contend that that capital should be used to rebuild what Russia has devastated: EU officials calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself effectively against subsequent Russian attacks".

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

Belgium is worried it will be burdened by an huge bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can accept.

Until now the EU has held off accessing the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now predominantly turned into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has addressed them.

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

If Euroclear face a financial hit 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.

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning 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.

The Reasons Belgium is Still Not Convinced

Belgium is adamant it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the fallout if things go wrong.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to secure adequate protections for the loan itself, Belgium is concerned about an added risk of being subject to extra legal costs.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? 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 secure water-tight assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the economically realistic and politically realistic solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be used, there are added concerns among European figures that the US may want to deploy Russia's frozen billions 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 cognizant the US has been talking to Russia about possible partnership.

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