Moscow Hits Back at the EU's Proposal to Lend Frozen Moscow's Assets to Kyiv

Ukraine is depleting its funding to keep going its armed forces and economy, after nearly four years of full-scale conflict with Russia.

For Europe, the solution to addressing Kyiv's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Russian officials 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 prior to a final decision is made.

'Only Fair' to Utilize Moscow's Funds, Say Ukraine and the EU

All told, Russia has approximately €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has devastated: Brussels refers to it as a "reconstruction loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is concerned it will be left with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

Brussels is under pressure before next Thursday's summit to agree on a compromise that Belgium can agree to.

Until now the EU has refrained from using the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is considered permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to secure the capital on capital markets, secured against the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now predominantly turned into cash. That funding is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is assured it has dealt with them.

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

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Not Yet Convinced

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to secure adequate guarantees for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

Prof Colaert also believes the demand for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to get ironclad protections for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the financially feasible and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about possible partnership.

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