Moscow Responds at Europe's Scheme to Lend Frozen Russian Cash to Kyiv

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

For Europe, the answer to filling Kyiv's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels hope to finalize the plan at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Moscow's Funds, Assert European and Ukrainian Officials

In total, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has laid waste to: The European Commission terms it a "loan for reparations" 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 devastated – and that those funds then becomes ours," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is anxious it will be saddled with an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

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

Previously the EU has held off touching 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. From a legal standpoint, using the profits is seen as safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options seeking to furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• Option one is to borrow the funds on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now mostly matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is assured it has addressed them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any ruling by a Russian court would not be accepted 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 for the foreseeable future.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an special provision 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 Still Not On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being shouldering the fallout if things fail.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

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

"Lenders need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute guarantees for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, state 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 "a economically realistic and politically achievable solution".

"It is a decisive moment 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 accessed, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

A preliminary version of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving