Moscow Responds at Europe's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is running out of cash to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the answer to plugging Ukraine's financial shortfall of €135.7bn for the following biennium is found in Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Just' to Use Russia's Funds, Assert European and Ukrainian Officials

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

The EU and Ukraine contend that that capital should be used to rebuild what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has proposed a plan to bolster 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 money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is worried it will be burdened by an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure prior to next Thursday's summit to finalize a compromise that Belgium can support.

Previously the EU has refrained from accessing the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is deemed permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a consensus 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 Russian assets, which were at first held in securities but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is confident it has resolved them.

The scheme is for Belgium to be safeguarded with a assurance applying to all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

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

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

The EU ambassadors are set to use an special provision 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.

The Reasons Belgium is Still Not Convinced

Belgium is adamant it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and fears being forced to deal with the consequences if things fail.

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

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

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium fears an additional danger of being exposed to extra fines or liabilities.

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

"Banks need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

The situation is urgent, 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 fiscally viable and politically realistic solution".

"This is a crucial test for us," states 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".

While Russia is adamant its money should not be used, there are added concerns among EU officials that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about potential collaboration.

A preliminary version of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving