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

Kyiv remains facing a severe shortage of funding to maintain its military and economy, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Employ Moscow's Assets, Argue Ukraine and the EU

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that those funds should be used to rebuild what Russia has devastated: Brussels terms it a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

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

Belgium is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says 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 endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

Brussels is under pressure before next Thursday's summit to come up with a solution that Belgium can accept.

Until now the EU has refrained from touching the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is seen as safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on financial markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now largely been converted into cash. That funding is Euroclear property located within the European Central Bank.

The European Commission acknowledges Belgium has valid worries and says it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced 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.

Heretofore they have had to vote by consensus every six months to continue 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 "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and is concerned about being shouldering the repercussions if things do not work out.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium worries about an additional danger of being vulnerable to extra fines or liabilities.

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

"Banks need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight protections for Euroclear."

EU Leaders Facing Strain from All Sides

Time is of the essence, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the fiscally viable and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be used, there are added concerns among European figures that the US may want to deploy Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.

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