Moscow Hits Back at the EU's Plan to Loan Frozen Moscow's Cash to Ukraine

Ukraine is running out of financial resources to keep going its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the answer to plugging Kyiv's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

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

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

The EU and Ukraine maintain that that capital should be used to rebuild what Russia has devastated: The European Commission refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz says the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept 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?

The EU is working to the wire prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has refrained from accessing the principal funds directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as permissible as Russia is under sanction and the earnings are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options aimed at furnishing Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to raise the money on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and states it is assured it has addressed them.

The scheme is for Belgium to be shielded with a guarantee applying to 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.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

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

Until now 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 expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is firm it remains a committed partner of Ukraine, but sees legal risks in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium is concerned about an further exposure of being subject to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to secure water-tight protections for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the fiscally viable and politically realistic solution".

"This is a crucial test for us," warns 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized billions in another way, as part of its own diplomatic proposal.

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

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