Moscow Responds at Europe's Proposal to Lend Frozen Moscow's Funds to Ukraine

Kyiv remains running out of financial resources to keep going its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Moscow's Funds, Argue European and Ukrainian Officials

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

Brussels and Kyiv maintain that that capital should be used to restore what Russia has destroyed: The European Commission terms it a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is anxious it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can support.

So far the EU has refrained from using the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to borrow the funds on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava object to 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 mostly matured into cash. That capital is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and states it is convinced it has resolved them.

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

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

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously 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 set 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.

The Reasons Belgium is Remains Satisfied

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being left to handle the repercussions if things fail.

A typically partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium fears an further exposure of being subject to extra legal costs.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Financial institutions need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight protections for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and politically realistic solution".

"It is a decisive moment for us," states 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 succeed in a week's time".

While Russia is adamant its money should not be touched, there are added concerns among leaders in Europe 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 working with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about possible partnership.

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