Russia Responds at the EU's Scheme to Lend Frozen Moscow's Funds to Kyiv

Kyiv remains facing a severe shortage of cash to keep going its military and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Ukraine's funding gap of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

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

In total, 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 rebuild what Russia has destroyed: Brussels refers to it as a "reparations loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against future Russian attacks".

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

The Belgian government is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

The EU is working to the wire before next Thursday's summit to come up with a compromise that Belgium can accept.

Previously the EU has avoided using the principal funds directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed permissible as Russia is under sanction and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• The first is to borrow the funds on the markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now largely turned into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and says it is assured it has dealt with them.

The plan is for Belgium to be shielded 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 settlement agency which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to renew the freeze, which could have meant a constant 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 Still Not Satisfied

Brussels is adamant it remains a strong supporter of Ukraine, but identifies legal risks in the plan and is concerned about being left to handle the consequences if things go wrong.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider 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 enough assurances for the loan itself, Belgium worries about an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also contends 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 put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things turn sour 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 protections for Euroclear."

EU Leaders Facing Strain from All Sides

There is no time to lose, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a financially feasible and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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