Moscow Hits Back at Europe's Scheme to Loan Frozen Russian Cash to Kyiv

Kyiv remains running out of cash to maintain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Use Russia's Funds, Say European and Ukrainian Officials

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

Brussels and Kyiv maintain that that capital should be used to restore what Russia has destroyed: Brussels terms it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself effectively against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

European Union officials is racing against time ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

So far the EU has avoided using the principal funds directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• One is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were originally held in financial instruments but have now largely been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is confident it has resolved them.

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

Should Euroclear incur losses 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.

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 poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is insistent it remains a committed partner of Ukraine, but sees legal risks in the plan and worries about being shouldering the consequences if things fail.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an additional danger of being subject to extra legal costs.

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

"Financial institutions need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just 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 become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to get water-tight protections for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most financially feasible and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about potential collaboration.

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