Moscow Hits Back at Europe's Plan to Lend Frozen Russian Cash to Ukraine

Kyiv remains depleting its financial resources to keep going its military and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Utilize Moscow's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv maintain that those funds should be used to rebuild what Russia has laid waste to: Brussels terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that money then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "allow Ukraine to shield itself efficiently against future Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "disrupt the international financial system".

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

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

The Details of the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has avoided touching the principal funds directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to furnishing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• The first is to secure the capital on the markets, backed by the EU budget as a collateral. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is assured it has resolved them.

The proposal is for Belgium to be safeguarded with a insurance 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 clearing house which are in the EU.

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

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the consequences if things fail.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to secure adequate assurances for the loan itself, Belgium worries about an added risk of being vulnerable to extra damages or penalties.

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

"Financial institutions need to comply with prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these banking laws? 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 vital for Belgium to obtain water-tight protections for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the financially feasible and practically possible solution".

"It's a matter of destiny for us," warns 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 succeed in a week's time".

While Russia is insistent its money should not be used, there are added concerns among EU officials that the US may want to deploy Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

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