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

Kyiv remains depleting its cash to keep going its military and economy, after close to 48 months of full-scale conflict with Russia.

For Europe, the remedy to addressing Ukraine's funding gap of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Utilize Russia's Funds, Argue Ukraine and the EU

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has destroyed: Brussels calls it a "reparations 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 devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

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

Russia's court action was anticipated in Brussels. But it is not only Moscow that is unhappy.

Belgium is anxious it will be left with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can accept.

Previously the EU has held off accessing the frozen capital directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered less risky as Russia is subject to sanctions and the returns are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to cover a majority of its funding needs.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be difficult when two member states are against 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 securities but have now largely been converted into cash. That money is owned by Euroclear located within the European Central Bank.

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

The scheme is for Belgium to be protected with a insurance covering 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.

If Russia targeted Belgium itself, any decision by a Russian court would not be accepted 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 permanently.

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

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

Why Belgium is Remains On Board

Belgium is insistent it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the repercussions if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

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

Prof Colaert also argues the stipulation for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Banks need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is instructing 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 become the responsibility of Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"This is a crucial test for us," states 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".

While Russia is insistent its money should not be used, there are further worries among European figures that the US may want to use Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

An early draft 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