Moscow Responds at Europe's Scheme to Lend Frozen Moscow's Funds to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy, after nearly four years of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

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

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

All told, Russia has roughly €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 that capital should be used to restore what Russia has destroyed: EU officials calls it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

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

Belgium is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is working to the wire before next Thursday's summit to come up with a compromise that Belgium can support.

Previously the EU has avoided using the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly turned 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 dealt with them.

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

Should Euroclear suffer a loss 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.

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

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the consequences if things go wrong.

A usually partisan political environment in this case has united 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 – imagine if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure sufficient assurances for the loan itself, Belgium fears an added risk of being vulnerable to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight guarantees for Euroclear."

EU Leaders Facing Strain from Every Direction

There is no time to lose, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically realistic solution".

"It's a matter of destiny 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 succeed in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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