Moscow Responds at the EU's Proposal to Loan Frozen Moscow's Funds to Kyiv

Kyiv remains facing a severe shortage of funding to keep going its military and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the answer to plugging Kyiv's financial shortfall of €135.7bn for the following biennium lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to sign that off at their EU leaders' conference next week.

Russian officials state the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Utilize Russia's Assets, Argue Ukraine and the EU

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

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has devastated: Brussels terms it a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

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

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

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

Authorities in Brussels is anxious it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has avoided accessing the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is deemed safe as Russia is under sanction and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at furnishing Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely turned into cash. That money is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has justified fears and states it is confident it has resolved them.

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

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

Should Russia took legal action against 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 freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are set 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 financial well-being of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but identifies legal risks in the plan and worries about being left to handle the fallout if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an further exposure of being exposed to extra damages or penalties.

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

"Lenders need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Every Direction

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a economically realistic and politically achievable 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".

Although Russia is insistent its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving