Moscow Responds at Europe's Scheme to Loan Immobilized Russian Funds to Kyiv

Ukraine is running out of financial resources to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Russian officials warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Moscow's Assets, Argue Ukraine and the EU

In total, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that money should be used to restore what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is anxious it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

European Union officials is working to the wire prior to next Thursday's summit to finalize a compromise that Belgium can support.

So far the EU has avoided touching the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is deemed less risky as Russia is sanctioned and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans designed to providing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• One is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now predominantly been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is confident it has dealt with them.

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

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

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

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is insistent it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being shouldering the consequences if things go wrong.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

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

"Financial institutions need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to obtain absolute protections for Euroclear."

EU Leaders Under Pressure from All Sides

Time is of the essence, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a economically realistic and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about future co-operation.

A preliminary version of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving