Moscow Hits Back at Europe's Plan to Loan Frozen Moscow's Funds to Kyiv

Kyiv remains running out of funding to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to plugging Kyiv's budget hole of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Moscow's Assets, Assert Ukraine and the EU

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

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has devastated: EU officials terms it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate 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.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself efficiently against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be burdened by an massive bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is working to the wire before next Thursday's summit to finalize a solution that Belgium can accept.

So far the EU has held off accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• Option 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 requires a agreement by all by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now largely matured into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is confident it has addressed them.

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

Should 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.

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

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

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Remains Satisfied

Brussels is insistent it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and fears being left to handle the consequences if things fail.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – imagine 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 sufficient guarantees for the loan itself, Belgium worries about an added risk of being exposed to extra damages or penalties.

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

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

EU Leaders Facing Strain from All Sides

Time is of the essence, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal 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 immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

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