Moscow Hits Back at the EU's Plan to Loan Frozen Russian Cash to Kyiv

Kyiv remains depleting its financial resources to sustain its armed forces and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the coming 24 months lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Utilize Moscow's Funds, Say Kyiv and Brussels

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

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

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

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

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

The Belgian government is worried it will be saddled with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, 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 ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

Until now the EU has avoided using the assets themselves directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options designed to supplying Ukraine with €90bn, to finance a large portion of its financial requirements.

• The first is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely been converted into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has valid worries and says it is convinced it has dealt with them.

The proposal is for Belgium to be protected with a guarantee 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.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected 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 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 regulatory pitfalls in the plan and fears being shouldering the fallout if things fail.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

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

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

The European Union Under Pressure from Every Direction

There is no time to lose, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the fiscally viable and practically possible 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 accessed, there are additional apprehensions among EU officials that the US may want to use Russia's blocked funds differently, 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 cognizant the US has been holding discussions with Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving