Russia Responds at Europe's Proposal to Loan Frozen Moscow's Funds to Kyiv

Kyiv remains depleting its cash to sustain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Moscow's Assets, Say European and Ukrainian Officials

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

The EU and Ukraine argue that money should be used to restore what Russia has devastated: EU officials calls it a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself successfully against future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is worried it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU 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 "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials is under pressure before next Thursday's summit to finalize a solution that Belgium can agree to.

Until now the EU has avoided touching the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered less risky as Russia is under sanction and the earnings are not Moscow's sovereign assets.

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

There are currently two EU plans aimed at supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to borrow the funds on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and claims it is confident it has dealt with them.

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

Should Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

Should Russia targeted Belgium itself, any decision by a Russian court would not be enforced 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 permanently.

Until now they have had to vote unanimously 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 stay blocked as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is firm it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the repercussions if things fail.

A normally 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 has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to secure adequate protections for the loan itself, Belgium fears an further exposure of being vulnerable to extra fines or liabilities.

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

"Banks need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad protections for Euroclear."

The European Union Facing Strain from Every Direction

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most financially feasible and practically possible solution".

"It is a decisive moment 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's frozen billions for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about potential collaboration.

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