Moscow Responds at the EU's Plan to Lend Immobilized Moscow's Funds to Ukraine

Kyiv remains depleting its funding to sustain its military and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the remedy to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials aim to sign that off at their Brussels summit next week.

Authorities in Russia state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Use Russia's Funds, Say Kyiv and Brussels

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

Brussels and Kyiv argue that that capital should be used to reconstruct 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 is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

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

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

Belgium is concerned it will be burdened by an massive bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can support.

So far the EU has avoided accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is considered safe as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• One is to raise the money on the markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now mostly matured into cash. That funding is an asset of Euroclear located within the European Central Bank.

The EU's executive accepts Belgium has justified fears and claims it is confident it has resolved them.

The plan 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 shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote unanimously 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 interests of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being left to handle the repercussions if things do not work out.

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

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate 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 provide a loan to the EU would breach EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these financial regulations? 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 an additional reason why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe 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 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 accessed, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about potential collaboration.

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