Russia Responds at Europe's Proposal to Lend Immobilized Moscow's Cash to Kyiv

Ukraine is depleting its funding to sustain its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Ukraine's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Moscow's Assets, Argue European and Ukrainian Officials

In total, Russia has approximately €210bn of its funds blocked in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to restore what Russia has devastated: Brussels terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is worried it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with 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.

What is the EU's Proposal?

The EU is racing against time before next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has held off using the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is deemed safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a agreement by all 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 at first held in bonds but have now mostly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and states it is convinced it has dealt with them.

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

If Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Remains Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and fears being left to handle the fallout if things go wrong.

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

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium fears an added risk of being subject to extra legal costs.

Prof Colaert also contends the demand for Euroclear to provide 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 instructing Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain water-tight assurances for Euroclear."

The European Union Facing Strain from All Sides

The situation is urgent, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the fiscally viable and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 touched, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds differently, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

An early draft of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving