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

Kyiv remains depleting its cash to keep going its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the remedy to filling Ukraine's financial shortfall of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to sign that off at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Employ Moscow's Assets, Say Ukraine and the EU

In total, Russia has about €210bn of its funds blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that money should be used to restore what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to protect itself effectively against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse 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 Proposal?

The EU is racing against time before next Thursday's summit to come up with a arrangement that Belgium can agree to.

Until now the EU has held off touching the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is seen as safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance 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 seeking to furnishing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one 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 unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now mostly matured into cash. That capital is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and states it is convinced it has dealt with them.

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

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

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

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Not Yet On Board

The Belgian government is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and fears being shouldering the fallout if things do not work out.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is around €565bn – think about 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 assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra damages or penalties.

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

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to get ironclad protections for Euroclear."

EU Leaders In a Difficult Position from Every Direction

There is no time to lose, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic 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 afterwards. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among European figures that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

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

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