Moscow Responds at Europe's Proposal to Lend Frozen Russian Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to sustain its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Kyiv's funding gap of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and EU leaders hope to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Employ Russia's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has destroyed: Brussels refers to it as a "loan for reparations" 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," remarks Ukrainian President Volodymyr Zelensky.

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

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

Belgium is anxious it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a arrangement that Belgium can agree to.

So far the EU has avoided touching the frozen capital directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as permissible as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it demands 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 Russian assets, which were originally held in financial instruments but have now largely matured into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is confident it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, that would be offset 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 enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and worries about being shouldering the fallout if things do not work out.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an added risk of being subject to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to secure ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

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 proposal to use Russian funds is "the fiscally viable and politically realistic solution".

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

Although Russia is insistent its money should not be accessed, there are added concerns among European figures that the US may want to deploy Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant 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