Moscow Hits Back at Europe's Proposal to Lend Immobilized Russian Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels hope to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Assert Kyiv and Brussels

Overall, Russia has about €210bn of its funds blocked in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that money should be used to restore what Russia has devastated: EU officials calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has devastated – and that that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "undermine the world's financial order".

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

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

What is the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to finalize a solution that Belgium can accept.

Until now the EU has refrained from accessing the principal funds directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is deemed permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to raise the money on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were initially held in financial instruments but have now mostly turned into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is assured it has resolved them.

The plan is for Belgium to be safeguarded 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.

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

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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 planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and worries about being shouldering the fallout if things go wrong.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure adequate guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra legal costs.

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

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

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to obtain water-tight assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and practically possible solution".

"This is a crucial test 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 accessed, there are added concerns among EU officials that the US may want to use Russia's blocked funds differently, as part of its own peace initiative.

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

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