Moscow Responds at Europe's Scheme to Lend Frozen Moscow's Funds to Kyiv

Ukraine is depleting its funding to maintain its armed forces and economy, after almost four years of Russia's full-scale war.

For Europe, the remedy to filling Kyiv's funding gap of €135.7bn for the following biennium lies 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.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

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

All told, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities contend that those funds should be used to restore what Russia has devastated: The European Commission refers to it as a "reparations loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against any future Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

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

Explaining the EU's Proposal?

Brussels is working to the wire prior to next Thursday's summit to come up with a arrangement that Belgium can accept.

Until now the EU has avoided touching the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply 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 presently two EU options designed to supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• The first is to raise the money on capital 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 problematic when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in bonds but have now predominantly been converted into cash. That money is owned by Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and states it is assured it has dealt with them.

The plan is for Belgium to be safeguarded with a guarantee 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.

In the event that Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the consequences if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," says 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 is concerned about an additional danger of being exposed to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

Time is of the essence, state several 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 fiscally viable and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about potential collaboration.

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