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

Kyiv remains running out of cash to sustain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to addressing Kyiv's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Use Russia's Assets, Argue Kyiv and Brussels

Overall, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has laid waste to: EU officials 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 Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to shield itself efficiently against future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is worried it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

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

Previously the EU has refrained from touching the frozen capital directly but since last year has directed the "excess income" 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 returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That capital is Euroclear property deposited at the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and states it is confident it has addressed them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to immobilise 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 repeated risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet On Board

Belgium is insistent it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things fail.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to obtain enough protections for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

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

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

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure water-tight assurances for Euroclear."

The European Union Under Pressure from All Sides

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and politically achievable solution".

"It is a decisive moment for us," says 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 adamant its money should not be touched, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

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

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