Russia Responds at the EU's Proposal to Loan Immobilized Moscow's Cash to Ukraine

Kyiv remains depleting its cash to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to plugging Kyiv's funding gap of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Russia's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself efficiently against future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

The EU is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

Until now the EU has refrained from touching the principal funds directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is considered permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to make up the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• One is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is convinced it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

Should Russia took legal action against 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 all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set 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.

Why Belgium is Not Yet On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the consequences if things do not work out.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to secure sufficient protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from Every Direction

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a economically realistic and practically possible solution".

"It's a matter of destiny 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 finalize the deal in a week's time".

While Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about future co-operation.

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