Moscow Hits Back at Europe's Plan to Lend Frozen Moscow's Cash to Kyiv

Ukraine is facing a severe shortage of financial resources to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the answer to addressing Ukraine's financial shortfall of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels aim to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an confiscation, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Utilize Moscow's Assets, Argue Ukraine and the EU

In total, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that money should be used to restore what Russia has destroyed: Brussels terms it a "reparations loan" and has come up with a plan to support 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 that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is worried it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

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

Previously the EU has refrained from accessing the assets themselves directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed permissible as Russia is under sanction and the returns 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 deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans designed to supplying Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• One is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and states it is confident it has dealt with them.

The scheme is for Belgium to be safeguarded 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, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the consequences if things do not work out.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to comply with capital and liquidity requirements 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 solvent. And if things turn sour 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 guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

There is no time to lose, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about possible partnership.

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