Moscow Responds at the EU's Scheme to Loan Frozen Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to sustain its military and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels seek to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Utilize Russia's Assets, Argue Ukraine and the EU

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

The EU and Ukraine argue that that capital should be used to restore what Russia has devastated: EU officials terms it a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

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

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

Belgian Prime Minister 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 refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to finalize a arrangement that Belgium can support.

So far the EU has refrained from accessing the assets themselves directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is under sanction and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to pay for a large portion of its funding needs.

• One is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in securities but have now mostly been converted into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and states it is confident it has dealt with them.

The proposal is for Belgium to be protected with a assurance applying to all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset 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 decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote unanimously every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure 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 Not Yet Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being left to handle the repercussions if things go wrong.

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

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

Although the EU might be able to obtain adequate protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure water-tight protections for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a economically realistic and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to succeed 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 deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving