Russia Hits Back at the EU's Plan to Loan Immobilized Moscow's Cash to Kyiv

Kyiv remains running out of financial resources to maintain its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the solution to plugging Ukraine's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Moscow's Funds, Argue Ukraine and the EU

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has laid waste to: The European Commission calls it a "reconstruction loan" and has come up with 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 destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is worried it will be left with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt 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 reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is under pressure prior to next Thursday's summit to come up with a solution that Belgium can support.

So far the EU has held off accessing the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is considered permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• One is to raise the money on the markets, backed by the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now predominantly matured into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has justified fears and claims it is assured it has addressed them.

The plan is for Belgium to be shielded with a insurance applying to 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.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being shouldering the consequences if things do not work out.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain enough guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

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

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

"Why do we have 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 an additional reason why it's so crucial for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders Under Pressure from All Sides

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most economically realistic and practically possible 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 subsequently. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be touched, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace plan.

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

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