Russia Responds at Europe's Plan to Loan Frozen Moscow's Funds to Kyiv

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

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to finalize the plan at their EU leaders' conference next week.

Moscow's representatives 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 ahead of a definitive agreement is made.

'Just' to Utilize Moscow's Funds, Assert European and Ukrainian Officials

Overall, Russia has about €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has laid waste to: Brussels terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to shield itself successfully against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is worried it will be burdened by an huge bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

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

Until now the EU has held off using the principal funds directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed less risky as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to secure the capital on financial markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in securities but have now largely matured into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has valid worries and states it is confident it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

If 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 freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore 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 emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but sees legal risks in the plan and fears being forced to deal with the repercussions if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

While the EU might be able to obtain sufficient protections for the loan itself, Belgium fears an added risk of being subject to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute guarantees for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most economically realistic and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, 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 used, there are further worries among European figures that the US may want to use Russia's immobilized billions differently, as part of its own peace plan.

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

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