Moscow Hits Back at the EU's Scheme to Lend Immobilized Russian Cash to Kyiv

Ukraine is depleting its cash to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the remedy to filling Kyiv's financial shortfall of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Moscow's Assets, Argue Kyiv and Brussels

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has devastated: Brussels calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself efficiently against subsequent Russian attacks".

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

The Belgian government is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

The EU is racing against time ahead of next Thursday's summit to come up with a arrangement that Belgium can agree to.

Previously the EU has refrained from accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is deemed less risky as Russia is under sanction and the returns are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly been converted into cash. That capital is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is assured it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

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

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet On Board

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

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

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

"Banks need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure absolute protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the 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 subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are additional apprehensions among European figures that the US may want to use Russia's blocked funds differently, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about potential collaboration.

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