Moscow Hits Back at Europe's Proposal to Lend Immobilized Moscow's Cash to Ukraine

Ukraine is running out of funding to maintain its military and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the solution to filling Kyiv's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Employ Moscow's Assets, Assert Kyiv and Brussels

In total, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities argue that that capital should be used to restore what Russia has devastated: Brussels calls it a "reparations loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to defend itself successfully against future Russian attacks".

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

Authorities in Brussels is anxious it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, 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 ahead of next Thursday's summit to finalize a arrangement that Belgium can support.

Until now the EU has avoided using the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as safe as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to cover a large portion of its funding needs.

• Option one is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in securities but have now mostly matured into cash. That funding is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and states it is confident it has resolved them.

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

If Euroclear face a financial hit 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 went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore 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 set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things go wrong.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to secure adequate guarantees for the loan itself, Belgium fears an added risk of being vulnerable to extra damages or penalties.

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

"Banks need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be solvent. 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 secure ironclad guarantees for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most economically realistic and practically possible solution".

"This is a crucial test 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 finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about potential collaboration.

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