Moscow Responds at the EU's Proposal to Loan Immobilized Moscow's Funds to Ukraine

Kyiv remains depleting its funding to keep going its military and economy afloat, after almost four years of full-scale conflict with Russia.

For Europe, the remedy to filling Kyiv's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Employ Moscow's Assets, Assert Ukraine and the EU

Overall, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities argue that those funds should be used to rebuild what Russia has laid waste to: The European Commission terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "destabilise the international financial system".

Euroclear also has an roughly €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 agree to the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire before next Thursday's summit to finalize a compromise that Belgium can agree to.

Until now the EU has avoided touching the principal funds directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered less risky as Russia is sanctioned and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option 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 money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is assured it has addressed them.

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

If Euroclear suffer a loss 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.

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

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote all together every six months to renew 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 "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the repercussions if things do not work out.

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

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

Although the EU might be able to obtain sufficient protections for the loan itself, Belgium is concerned about an further exposure of being exposed to extra legal costs.

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

"Banks need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get absolute assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among European figures that the US may want to deploy Russia's frozen billions in another way, as part of its own peace initiative.

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

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