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

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to filling Ukraine's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials seek to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

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

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has destroyed: EU officials calls it a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself effectively against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is worried it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has refrained from using the assets themselves directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible as Russia is under sanction and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

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

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are planning to use an emergency clause 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.

Why Belgium is Remains On Board

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and fears being left to handle the repercussions if things go wrong.

A usually 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.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure adequate protections for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

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

"Banks need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing 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 turn sour it would fall to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight assurances for Euroclear."

Europe Under Pressure from All Sides

The situation is urgent, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a economically realistic and politically achievable solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be accessed, there are added concerns among EU officials that the US may want to employ Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with 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