Moscow Hits Back at the EU's Scheme to Loan Immobilized Russian Cash to Kyiv

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

From the EU's perspective, the answer to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to sign that off at their Brussels summit next week.

Authorities in Russia warn 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 even before a definitive agreement is made.

'Only Fair' to Use Russia's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has devised a plan to support 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 those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

Brussels is under pressure ahead of next Thursday's summit to finalize a arrangement that Belgium can accept.

Previously the EU has avoided touching the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is seen as less risky as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and says it is confident it has dealt with them.

The proposal is for Belgium to be protected with a assurance covering all the €210bn of Russian assets in the EU.

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

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote all together every six months to renew 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 continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is insistent it remains a strong supporter of Ukraine, but sees legal risks in the plan and worries about being left to handle the fallout if things do not work out.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium worries about an further exposure of being vulnerable to extra legal costs.

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

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

"What is the purpose of 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 crucial for Belgium to obtain ironclad guarantees for Euroclear."

EU Leaders Under Pressure from All Sides

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most financially feasible and politically realistic 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

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

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