Moscow Responds at the EU's Proposal to Lend Immobilized Moscow's Cash to Ukraine

Kyiv remains depleting its cash to sustain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to addressing Kyiv's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an confiscation, 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 Employ Russia's Assets, Argue Ukraine and the EU

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

Brussels and Kyiv contend that that capital should be used to rebuild what Russia has laid waste to: The European Commission refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

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

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

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

Authorities in Brussels is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept 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 Plan?

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

Until now the EU has refrained from using the assets themselves directly but since last year has transferred the "extraordinary revenues" 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 returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to providing Ukraine with €90bn, to finance a majority of its funding needs.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely turned into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is confident it has dealt with them.

The proposal is for Belgium to be protected with a guarantee applying to 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 settlement agency which are in the EU.

Should Russia targeted Belgium itself, any decision 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.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure adequate protections for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

Prof Colaert also believes the stipulation for Euroclear to provide a loan to the EU would violate EU banking regulations.

"Banks need to follow stability regulations and shouldn't make one enormous loan. 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 stable. And if things go wrong it would fall to Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to secure water-tight protections for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, 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 insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has said 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 possible partnership.

An early draft of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving