Moscow Hits Back at the EU's Proposal to Loan Frozen Russian Funds to Kyiv

Ukraine is running out of financial resources to keep going its military and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to addressing Kyiv's financial shortfall of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Russia's Funds, Argue European and Ukrainian Officials

All told, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has destroyed: EU officials terms it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

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

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

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

Belgium is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time before next Thursday's summit to come up with a solution that Belgium can support.

Previously the EU has refrained from touching the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now predominantly turned into cash. That money is Euroclear property located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and claims it is confident it has addressed 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 shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

Until now 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 expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the repercussions if things fail.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to bear 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 is concerned about an further exposure of being subject to extra legal costs.

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

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to obtain water-tight guarantees for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and practically possible solution".

"It is a decisive moment for us," warns 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 succeed in a week's time".

While Russia is insistent its money should not be used, there are further worries among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving