Moscow Responds at Europe's Proposal to Loan Immobilized Moscow's Assets to Kyiv

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

For Europe, the solution to addressing Ukraine's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Russia's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv contend that those funds should be used to rebuild what Russia has laid waste to: EU officials calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself efficiently against future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is worried it will be burdened by an enormous bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

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

Until now the EU has avoided accessing the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at providing Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to borrow the funds on the markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly matured into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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.

Should Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

Previously they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not Satisfied

Brussels is firm it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and worries about being shouldering the consequences if things fail.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange enough protections for the loan itself, Belgium worries about an additional danger of being subject to extra fines or liabilities.

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

"Lenders need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get absolute protections for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and politically achievable solution".

"This is a crucial test for us," says 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 succeed in a week's time".

While Russia is insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to deploy Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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