Moscow Responds at Europe's Proposal to Loan Frozen Russian Cash to Kyiv

Ukraine is running out of cash to keep going its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the remedy to filling Kyiv's funding gap of €135.7bn for the next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Moscow's Assets, Say European and Ukrainian Officials

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

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has laid waste to: Brussels terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "help Ukraine to defend 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 anxious it will be left with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of 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 agree on a solution that Belgium can support.

Previously the EU has refrained from touching the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is deemed less risky as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at supplying Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be difficult 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 securities but have now predominantly matured into cash. That money is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and claims it is convinced it has dealt with them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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

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

Why Belgium is Still Not Convinced

Brussels is firm it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things do not work out.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an added risk of being exposed to extra damages or penalties.

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

"Banks need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to secure water-tight assurances for Euroclear."

EU Leaders Facing Strain from Every Direction

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," states 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 reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving