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

Kyiv remains facing a severe shortage of financial resources to sustain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the solution to plugging Ukraine's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Use Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has roughly €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that those funds should be used to restore what Russia has destroyed: Brussels calls it a "reparations loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is concerned it will be burdened by an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

Euroclear also has an estimated €16-17bn frozen 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 refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

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

Previously the EU has held off using the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is deemed permissible as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• One is to raise the money 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 challenging when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were initially held in securities but have now mostly turned into cash. That capital is owned by Euroclear held in the European Central Bank.

The European Commission accepts Belgium has justified fears and states it is assured it has resolved them.

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

If 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.

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

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to continue 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 stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is firm it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being shouldering the consequences if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in 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 subject to extra damages or penalties.

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

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things fail it would fall to Belgium to bail out Euroclear. That's another reason why it's so important for Belgium to obtain water-tight assurances for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. 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 additional apprehensions among EU officials that the US may want to use Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with 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