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

Kyiv remains depleting its funding to maintain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to plugging Ukraine's budget hole of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Use Russia's Funds, Assert Ukraine and the EU

In total, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that money should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "loan for reparations" and has come up with a plan to support Ukraine's economy amounting to €90bn.

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

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

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is concerned it will be burdened by an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

European Union officials is under pressure prior to next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has avoided accessing the frozen capital directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to cover a large portion of its financial requirements.

• One is to secure the capital on capital markets, secured against the EU budget as a surety. This is Belgium's first choice but it needs a consensus by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in bonds but have now predominantly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has valid worries and says it is convinced it has dealt with them.

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

Should Euroclear face a financial hit 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 took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains On Board

Brussels is adamant it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being forced to deal with the fallout if things go wrong.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium fears an added risk of being subject to extra damages or penalties.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to obtain water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

There is no time to lose, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and politically achievable 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 next. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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