Moscow Responds at the EU's Plan to Loan Frozen Russian Cash to Kyiv

Ukraine is depleting its cash to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to filling Ukraine's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Use Russia's Funds, Say Ukraine and the EU

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

European and Ukrainian authorities contend that that capital should be used to reconstruct what Russia has devastated: The European Commission calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "undermine the world's financial order".

Euroclear also has an roughly €16-17bn frozen in Russia.

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

European Union officials is under pressure prior to next Thursday's summit to come up with a solution that Belgium can support.

So far the EU has refrained from using the principal funds directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered safe as Russia is under sanction and the earnings are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• Option one is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult 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 securities but have now mostly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and states it is convinced it has resolved them.

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

Should 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 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 continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet On Board

Belgium is firm it remains a strong supporter of Ukraine, but identifies legal risks in the plan and worries about being left to handle the repercussions if things fail.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, professor of 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 exposed to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. 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 solvent. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad protections for Euroclear."

The European Union In a Difficult Position from All Sides

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

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has indicated 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.

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving