Moscow Responds at Europe's Proposal to Lend Immobilized Russian Funds to Kyiv

Ukraine is running out of financial resources to maintain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the answer to filling Ukraine's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

Russian officials warn the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Employ Moscow's Assets, Argue Ukraine and the EU

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has devastated: EU officials refers to it as a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself efficiently against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

The Belgian government is concerned it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

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

So far the EU has held off touching the frozen capital directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to pay for a majority of its funding needs.

• One is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were initially held in bonds but have now largely turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident 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.

Should 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.

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

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote all together every six months to extend 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 continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

Belgium is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the consequences if things fail.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange enough guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra legal costs.

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

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain absolute guarantees for Euroclear."

Europe Facing Strain from All Sides

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also aware the US has been engaging with Russia about possible partnership.

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