Moscow Responds at Europe's Plan to Lend Immobilized Russian Cash to Kyiv

Ukraine is running out of cash to sustain its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Russia's Funds, Say Kyiv and Brussels

Overall, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that that capital should be used to restore what Russia has devastated: EU officials calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

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

Authorities in Brussels is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to come up with a compromise that Belgium can agree to.

Until now the EU has held off accessing the principal funds directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed less risky as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now mostly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

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

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

If Euroclear suffer a loss 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.

If Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore 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 planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being forced to deal with the consequences if things go wrong.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

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

Although the EU might be able to arrange enough protections for the loan itself, Belgium is concerned about an further exposure 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 adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking 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 go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the financially feasible and politically realistic solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 touched, there are further worries among European figures that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about possible partnership.

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