Moscow Hits Back at Europe's Scheme to Lend Frozen Russian Cash to Kyiv

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

For Europe, the solution to addressing Ukraine's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels seek to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Use Russia's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities argue that those funds should be used to restore what Russia has devastated: Brussels calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself efficiently against future Russian attacks".

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

The Belgian government is concerned it will be left with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is racing against time before next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has avoided touching the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is deemed permissible as Russia is sanctioned and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to furnishing Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be problematic 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 initially held in financial instruments but have now mostly matured into cash. That money is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is convinced it has dealt with them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

Belgium is firm it remains a strong supporter of Ukraine, but sees legal risks in the plan and worries about being forced to deal with the repercussions if things do not work out.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine 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 secure adequate assurances for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is asking 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 become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad protections for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware 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 blocked funds being used by the US for reconstruction, with the US {taking|receiving