Moscow Responds at the EU's Plan to Lend Frozen Moscow's Funds to Ukraine

Kyiv remains depleting its funding to keep going its armed forces and economy, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the answer to addressing Ukraine's budget hole of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels seek to finalize the plan at their Brussels summit next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

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

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

The EU and Ukraine argue that money should be used to reconstruct what Russia has devastated: The European Commission refers to it as a "reparations loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

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

Belgium is anxious it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire ahead of next Thursday's summit to agree on a compromise that Belgium can agree to.

Previously the EU has held off touching the assets themselves directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is seen as safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options aimed at supplying Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now mostly turned into cash. That capital is Euroclear property deposited at the European Central Bank.

The EU's executive accepts Belgium has justified fears and claims it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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 took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

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

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the consequences if things do not work out.

A usually partisan political environment 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 approximately €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium fears an added risk of being exposed to extra fines or liabilities.

Prof Colaert also contends the requirement for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

There is no time to lose, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most financially feasible and politically realistic solution".

"This is a crucial test for us," says 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 reach an agreement in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among leaders in Europe that the US may want to employ Russia's blocked funds differently, as part of its own peace initiative.

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

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