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

Kyiv remains running out of funding to sustain its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Kyiv's financial shortfall of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

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

'Only Fair' to Use Moscow's Assets, Assert European and Ukrainian Officials

All told, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that money should be used to restore what Russia has laid waste to: EU officials refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

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

Belgium is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the international financial system".

Euroclear also has an roughly €16-17bn locked in Russia.

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

Brussels is working to the wire before next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has held off touching the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is deemed safe as Russia is sanctioned and the returns 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 plans seeking to supplying Ukraine with €90bn, to pay for a large portion of its financial requirements.

• One is to secure the capital 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 challenging when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now mostly turned into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and claims it is confident it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, that would be offset 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 significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

Previously 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 planning to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet Convinced

Brussels is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the consequences if things go wrong.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra fines or liabilities.

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

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure absolute assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and politically realistic solution".

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

While Russia is adamant its money should not be used, there are further worries among European figures that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

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