Moscow Hits Back at Europe's Proposal to Loan Frozen Moscow's Funds to Ukraine

Kyiv remains depleting its funding to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to sign that off at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Use Russia's Assets, Argue Ukraine and the EU

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

European and Ukrainian authorities contend that money should be used to reconstruct what Russia has laid waste to: Brussels refers to it as a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is concerned it will be left with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

Brussels is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can agree to.

Previously the EU has held off using the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed permissible as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at providing Ukraine with €90bn, to cover a large portion of its funding needs.

• The first is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in securities but have now mostly 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 assured it has addressed them.

The proposal is for Belgium to be shielded with a assurance applying to all the €210bn of Russian assets in the EU.

If 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 enforced in the EU.

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

Until now they have had to vote all together every six months to continue 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 "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Convinced

Brussels is firm it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the fallout if things do not work out.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure sufficient assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

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

"Lenders need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to get ironclad protections for Euroclear."

EU Leaders Under Pressure from Every Direction

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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