Moscow Responds at the EU's Proposal to Loan Immobilized Moscow's Funds to Kyiv

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

For Europe, the answer to filling Kyiv's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Utilize Russia's Funds, Say Ukraine and the EU

All told, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has laid waste to: EU officials calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government 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 "destabilise the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

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

So far the EU has refrained from accessing the frozen capital directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is deemed less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to cover a large portion of its funding needs.

• One is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now largely been converted into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and claims it is assured it has dealt with them.

The scheme is for Belgium to be protected with a assurance 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 settlement agency which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise 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 constant risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the fallout if things fail.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain adequate assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain absolute assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

The situation is urgent, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the financially feasible and politically achievable solution".

"It is a decisive moment for us," says 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 succeed in a week's time".

Although Russia is unyielding its money should not be touched, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.

An initial document 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