Moscow Responds at Europe's Scheme to Lend Immobilized Russian Cash to Kyiv

Ukraine is depleting its financial resources 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 solution to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels aim to sign that off at their Brussels summit next week.

Russian officials state the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Use Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine maintain that that capital should be used to rebuild what Russia has devastated: EU officials calls it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".

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

Belgium is worried it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

European Union officials is racing against time ahead of next Thursday's summit to come up with a solution that Belgium can accept.

Previously the EU has refrained from accessing the assets themselves directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is deemed permissible as Russia is under sanction and the earnings are not Moscow's sovereign assets.

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

There are currently two EU options designed to furnishing Ukraine with €90bn, to cover a large portion of its funding needs.

• Option one is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now largely matured into cash. That capital is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is confident it has dealt with them.

The plan is for Belgium to be shielded with a assurance covering all the €210bn of Russian assets in the EU.

Should Euroclear incur losses 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 went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to renew 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 stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

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

A usually fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain sufficient protections for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure water-tight guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most economically realistic and practically possible solution".

"This is a crucial test for us," states 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 finalize the deal in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's blocked funds for another purpose, as part of its own peace plan.

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

An early draft 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