Moscow Hits Back at the EU's Scheme to Lend Immobilized Russian Cash to Kyiv

Kyiv remains running out of funding to maintain its armed forces and economy, after close to 48 months of Russia's full-scale war.

For Europe, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Utilize Russia's Assets, Assert European and Ukrainian Officials

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

Brussels and Kyiv maintain that money should be used to restore what Russia has devastated: The European Commission refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is anxious it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has avoided accessing the assets themselves directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is deemed less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• One is to borrow the funds on the markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly turned into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is confident it has addressed them.

The scheme is for Belgium to be safeguarded with a assurance applying to 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 settlement agency which are in the EU.

Should Russia targeted Belgium itself, any ruling by a Russian court would not be accepted in the EU.

As an important step, 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 set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not On Board

Brussels is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and worries about being left to handle the consequences if things do not work out.

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

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

While the EU might be able to secure sufficient guarantees for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

Prof Colaert also contends the requirement for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be accessed, 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 coordinating with Europe and the US on a reconstruction fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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