Moscow Hits Back at the EU's Plan to Loan Immobilized Russian Cash to Kyiv

Ukraine is depleting its financial resources to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Employ Moscow's Funds, Say Ukraine and the EU

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

European and Ukrainian authorities contend that those funds should be used to restore what Russia has laid waste to: EU officials terms it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".

Russia's court action was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be left with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

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

Explaining the EU's Strategy?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can agree to.

Until now the EU has refrained from using the principal funds directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to providing Ukraine with €90bn, to cover a large portion of its financial requirements.

• One is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely matured into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has valid worries and claims it is assured it has addressed them.

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

If Euroclear incur losses 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.

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

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

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

The EU ambassadors are planning 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 security of the union" continues.

Why Belgium is Remains Convinced

Brussels is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the consequences if things fail.

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

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium worries about an added risk of being subject to extra legal costs.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Under Pressure from Every Direction

The situation is urgent, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be used, there are added concerns among EU officials that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with 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