Moscow Hits Back at Europe's Scheme to Lend Frozen Russian Cash to Ukraine

Ukraine is facing a severe shortage of funding to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to filling Ukraine's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Employ Russia's Assets, Say Ukraine and the EU

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

European and Ukrainian authorities contend that that capital should be used to restore what Russia has devastated: Brussels calls it a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to defend itself successfully against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has held off using the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as 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 struggled to make up the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to borrow the funds on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in securities but have now largely been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and states it is assured it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

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

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

The EU ambassadors are planning 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.

The Reasons Belgium is Not Yet On Board

Brussels is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the fallout if things fail.

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

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain enough guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

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

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. 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 become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and politically realistic solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 leaders in Europe that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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