Moscow Hits Back at Europe's Plan to Lend Immobilized Russian Funds to Kyiv

Ukraine is facing a severe shortage of financial resources to sustain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the solution to plugging Kyiv's budget hole of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Use Moscow's Assets, Assert European and Ukrainian Officials

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

The EU and Ukraine maintain that money should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "help Ukraine to shield itself successfully against subsequent Russian attacks".

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

Belgium is anxious it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate 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 Plan?

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

Previously the EU has held off accessing the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is deemed safe as Russia is sanctioned and the returns are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to borrow the funds on the markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a consensus by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were initially held in securities but have now predominantly turned into cash. That capital is Euroclear property located within the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is convinced it has resolved them.

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

If Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

If Russia targeted Belgium itself, any ruling by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

Belgium is firm it remains a staunch ally of Ukraine, but identifies legal risks in the plan and is concerned about being left to handle the repercussions if things go wrong.

A typically partisan political environment 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 about €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient protections for the loan itself, Belgium fears an further exposure of being exposed to extra damages or penalties.

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

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

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to secure absolute assurances for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable and politically achievable solution".

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

While Russia is insistent its money should not be used, there are further worries among EU officials that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving