Moscow Responds at Europe's Plan to Loan Frozen Russian Funds to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Moscow's Funds, Argue Kyiv and Brussels

In total, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that money should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be saddled with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

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

Previously the EU has held off using the principal funds directly but since last year has directed 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 earnings are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to supplying Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to raise the money on the markets, backed 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 Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now mostly been converted into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and claims it is confident it has dealt with them.

The plan is for Belgium to be protected with a guarantee 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 judgment by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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 expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the fallout if things fail.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain adequate guarantees for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get absolute assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

There is no time to lose, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are further worries among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant 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