Moscow Hits Back at the EU's Scheme to Loan Immobilized Moscow's Funds to Kyiv

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

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Utilize Moscow's Assets, Say Kyiv and Brussels

Overall, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that money should be used to restore what Russia has devastated: Brussels refers to it as a "loan for reparations" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

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

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

The Belgian government is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

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

What is the EU's Plan?

The EU is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can accept.

Until now the EU has refrained from touching the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed permissible as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options aimed at supplying Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were initially held in financial instruments but have now predominantly turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

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

The proposal is for Belgium to be protected with a guarantee encompassing 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.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus 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 "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the repercussions if things do not work out.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an further exposure of being exposed to extra damages or penalties.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling 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 turn sour it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

There is no time to lose, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most economically realistic and practically possible 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 finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's blocked funds in another way, as part of its own diplomatic proposal.

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

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