Moscow Hits Back at Europe's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is running out of cash to sustain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the solution to addressing Kyiv's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials aim to give it the green light at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Employ Russia's Assets, Argue European and Ukrainian Officials

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

Brussels and Kyiv contend that that capital should be used to rebuild what Russia has destroyed: Brussels calls it a "reconstruction loan" and has come up with a plan to bolster 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 those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself successfully against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is anxious it will be saddled with an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is working to the wire before next Thursday's summit to finalize a arrangement that Belgium can accept.

Previously the EU has avoided touching the frozen capital directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered permissible as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• One is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is assured it has dealt with them.

The proposal is for Belgium to be protected with a insurance encompassing all the €210bn of Russian assets in the EU.

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected 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 economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the fallout if things go wrong.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine 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 arrange adequate protections for the loan itself, Belgium is concerned about an additional danger of being subject to extra legal costs.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and politically realistic solution".

"It's a matter of destiny for us," says 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".

Although Russia is insistent its money should not be touched, there are added concerns among European figures that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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