Russia Responds at the EU's Scheme to Loan Frozen Moscow's Cash to Ukraine

Ukraine is depleting its cash to maintain its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to plugging Kyiv's funding gap of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Authorities in Russia 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 even before a definitive agreement is made.

'Just' to Use Moscow's Funds, Assert Kyiv and Brussels

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

Brussels and Kyiv maintain that that capital should be used to rebuild what Russia has devastated: The European Commission refers to it as a "reparations loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself efficiently against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is anxious it will be left with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

European Union officials is racing against time prior to next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided accessing the assets themselves directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as less risky as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• Option one is to secure the capital on financial markets, secured against 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.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now mostly matured into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is confident it has addressed them.

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

Should Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be recognized 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.

Heretofore they have had to vote all together every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not On Board

Brussels is adamant it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being forced to deal with 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 being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider 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 adequate protections for the loan itself, Belgium fears an added risk of being exposed to extra legal costs.

Prof Colaert also believes the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would fall to Belgium to bail out Euroclear. That's another reason why it's so important for Belgium to secure ironclad assurances for Euroclear."

The European Union In a Difficult Position from All Sides

Time is of the essence, warn several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the economically realistic and practically possible solution".

"It is a decisive moment 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 adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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