Moscow Hits Back at the EU's Plan to Lend Immobilized Moscow's Funds to Kyiv

Kyiv remains depleting its funding to keep going its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Kyiv's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels hope to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Employ Moscow's Funds, Say European and Ukrainian Officials

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

The EU and Ukraine argue that money should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reconstruction loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

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

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

Belgium is worried it will be left with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

Brussels is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has refrained from touching the principal funds directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is seen as safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now largely been converted into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has justified fears and claims it is assured it has dealt with them.

The scheme is for Belgium to be shielded with a assurance encompassing all the €210bn of Russian assets in the EU.

If 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.

Should Russia went after Belgium itself, any judgment by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a ongoing 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 "immediate threat to the financial well-being of the union" continues.

Why Belgium is Still Not Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and worries about being left to handle the repercussions if things go wrong.

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

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

While the EU might be able to obtain enough assurances for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

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

"Lenders need to follow prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad assurances for Euroclear."

Europe Facing Strain from All Sides

There is no time to lose, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

Although Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds in another way, as part of its own diplomatic proposal.

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

A preliminary version 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