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

Ukraine is facing a severe shortage of financial resources to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels seek to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Utilize Moscow's Assets, Argue Ukraine and the EU

All told, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has laid waste to: EU officials terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz argues the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".

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

The Belgian government is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the global financial architecture".

Euroclear also has an roughly €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 not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has refrained from accessing the principal funds directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered safe as Russia is sanctioned and the proceeds are not property of the Russian state.

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

There are currently two EU plans designed to providing Ukraine with €90bn, to finance a large portion of its financial requirements.

• Option one is to raise the money on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly turned 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 assured it has addressed them.

The proposal is for Belgium to be protected with a insurance encompassing all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise 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 constant risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure 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 Not Yet Convinced

Belgium is adamant it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things do not work out.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

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

"Financial institutions need to follow stability regulations 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 financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so important for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

There is no time to lose, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most fiscally viable and practically possible solution".

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

Although Russia is insistent its money should not be touched, there are additional apprehensions among EU officials that the US may want to deploy Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions 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.

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