Moscow Hits Back at Europe's Plan to Loan Immobilized Russian Funds to Ukraine

Ukraine is facing a severe shortage of financial resources to keep going its armed forces and economy, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the remedy to filling Kyiv's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels seek to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Use Moscow's Funds, Assert Kyiv and Brussels

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

The EU and Ukraine contend that money should be used to restore what Russia has laid waste to: Brussels terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is worried it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can accept.

Until now the EU has refrained from touching the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, 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 declined sharply in 2025, and Europe has struggled to make up the gap left by 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 cover a majority of its financial requirements.

• One is to borrow the funds on the markets, guaranteed by 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 two member states are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely been converted into cash. That capital is owned by Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and states it is convinced it has addressed them.

The scheme is for Belgium to be safeguarded with a insurance applying to all the €210bn of Russian assets in the EU.

Should Euroclear incur losses 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.

Should Russia went after Belgium itself, any judgment 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.

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Remains Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the repercussions 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.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an further exposure of being exposed to extra damages or penalties.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to secure ironclad protections for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most fiscally viable and politically achievable solution".

"It is a decisive moment for us," warns 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 reach an agreement in a week's time".

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

Zelensky has said 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 future co-operation.

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