Moscow Hits Back at the EU's Plan to Loan Frozen Russian Cash to Kyiv

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

For Europe, the answer to filling Ukraine's financial shortfall of €135.7bn for the following biennium lies in Moscow's immobilized funds located within Belgian bank Euroclear, and European Union officials seek to sign that off at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Utilize Russia's Funds, Assert Ukraine and the EU

All told, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv contend that that capital should be used to restore 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 amounting to €90bn.

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

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM 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 left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

Until now the EU has held off touching the frozen capital directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• The first is to raise the money on financial markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in bonds but have now mostly been converted into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is assured it has addressed them.

The proposal is for Belgium to be safeguarded with a insurance covering 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 clearing house which are in the EU.

In the event that Russia targeted 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 freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Still Not Convinced

Belgium is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being left to handle the repercussions if things do not work out.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an added risk of being vulnerable to extra legal costs.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get absolute assurances for Euroclear."

Europe Under Pressure from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and politically achievable 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 next. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving