Moscow Responds at Europe's Plan to Loan Frozen Moscow's Cash to Kyiv

Ukraine is depleting its funding to keep going its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to plugging Ukraine's funding gap of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Russia's Funds, Say Ukraine and the EU

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

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself successfully against future Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an huge bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

European Union officials is racing against time ahead of next Thursday's summit to finalize a arrangement that Belgium can agree to.

Until now the EU has held off touching the frozen capital directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

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

There are presently two EU proposals designed to furnishing Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now predominantly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and says it is assured it has dealt with them.

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

If 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.

If Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is insistent it remains a committed partner of Ukraine, but identifies legal risks in the plan and fears being shouldering the fallout if things go wrong.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an further exposure of being vulnerable to extra damages or penalties.

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

"Banks need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the financially feasible and politically realistic solution".

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

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about future co-operation.

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