Moscow Hits Back at Europe's Proposal to Loan Immobilized Moscow's Funds to Kyiv

Kyiv remains depleting its financial resources to sustain its armed forces and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Assets, Say Kyiv and Brussels

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

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has devastated: Brussels terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

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

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

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

Authorities in Brussels is worried it will be saddled with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is working to the wire before next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has held off using the assets themselves directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered permissible as Russia is sanctioned and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• One is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in securities but have now largely matured into cash. That money is Euroclear property deposited at the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and claims it is convinced it has dealt with them.

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

Should Euroclear incur losses 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.

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

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the repercussions if things go wrong.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about 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 secure adequate assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

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

"Financial institutions need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely 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 be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute protections for Euroclear."

The European Union Under Pressure from Every Direction

There is no time to lose, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and practically possible solution".

"It's a matter of destiny for us," says 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".

Although Russia is adamant its money should not be used, there are further worries among leaders in Europe that the US may want to deploy Russia's frozen billions differently, 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 aware the US has been holding discussions with Russia about future co-operation.

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