Moscow Hits Back at the EU's Proposal to Loan Immobilized Russian Cash to Ukraine

Ukraine is depleting its funding to sustain its armed forces and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to filling Kyiv's budget hole of €135.7bn for the coming 24 months lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

Russian officials caution the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Use Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has about €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv contend that that capital should be used to restore what Russia has destroyed: Brussels terms it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

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

Russia's court action was expected in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is anxious it will be saddled with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to agree on a arrangement that Belgium can support.

Until now the EU has held off using the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is considered less risky as Russia is under sanction and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to make up the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying 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 first choice but it needs a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly turned into cash. That capital is Euroclear property deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is convinced it has resolved them.

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

If Euroclear incur losses 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.

In the event that Russia went after Belgium itself, any judgment 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.

Previously they have had to vote all together every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an extraordinary measure 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 Remains Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being forced to deal with the repercussions if things fail.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

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

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Financial institutions need to follow prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and practically possible solution".

"It's a matter of destiny 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 finalize the deal in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has stated 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 possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving