Moscow Hits Back at Europe's Scheme to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is depleting its financial resources to sustain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the answer to filling Ukraine's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Russian officials caution the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Utilize Moscow's Assets, Say Kyiv and Brussels

Overall, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that those funds should be used to rebuild what Russia has destroyed: EU officials refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

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

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

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

Explaining the EU's Proposal?

Brussels is racing against time ahead of next Thursday's summit to finalize a compromise that Belgium can accept.

So far the EU has avoided accessing the principal funds directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to raise the money on the markets, secured against the EU budget as a surety. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly turned into cash. That capital is Euroclear property located within the European Central Bank.

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

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

If Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is firm it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries 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 facing pressure from fellow EU leaders.

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

Although the EU might be able to secure adequate protections for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

Europe Under Pressure from Every Direction

There is no time to lose, caution seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a economically realistic and politically achievable solution".

"This is a crucial test 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 finalize the deal in a week's time".

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

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

A preliminary version of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving