Moscow Hits Back at Europe's Plan to Lend Frozen Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of cash to maintain its military and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Kyiv's budget hole of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their EU leaders' conference next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

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

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

European and Ukrainian authorities maintain that that capital should be used to reconstruct what Russia has destroyed: Brussels terms it a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

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

The Belgian government is worried it will be left with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is under pressure prior to next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has avoided accessing the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• One is to secure the capital on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is convinced it has dealt with them.

The plan is for Belgium to be protected with a insurance applying to 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.

If Russia went after Belgium itself, any judgment by a Russian court would not be accepted 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 for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

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

A normally partisan political environment 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 about €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an further exposure of being vulnerable to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure absolute protections for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a financially feasible and politically achievable solution".

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

While Russia is insistent its money should not be touched, there are added concerns among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about future co-operation.

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