Moscow Hits Back at the EU's Scheme to Loan Frozen Moscow's Funds to Ukraine

Ukraine is running out of cash to sustain its military and economy, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the solution to filling Ukraine's funding gap of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Employ Russia's Funds, Assert European and Ukrainian Officials

All told, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that those funds should be used to reconstruct what Russia has devastated: The European Commission refers to it as a "loan for reparations" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," says Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is worried it will be left with an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

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

Previously the EU has refrained from accessing the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is deemed less risky as Russia is sanctioned and the returns are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to furnishing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly matured into cash. That capital is owned by Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims it is assured it has dealt with them.

The plan is for Belgium to be safeguarded with a insurance covering 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 targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated 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 economic interests of the union" continues.

Why Belgium is Not Yet On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and fears being shouldering the repercussions if things fail.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

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

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to get absolute guarantees for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the economically realistic and politically realistic 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 subsequently. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be touched, there are added concerns among European figures that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about possible partnership.

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