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

Kyiv remains facing a severe shortage of funding to maintain its military and economy, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials seek to finalize the plan at their meeting in Brussels next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Use Moscow's Funds, Argue Kyiv and Brussels

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

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has destroyed: Brussels terms it a "loan for reparations" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself efficiently against subsequent Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be saddled with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels 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.

What is the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can support.

Previously the EU has held off using the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at supplying Ukraine with €90bn, to finance a majority of its funding needs.

• The first is to borrow the funds on the markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now predominantly matured into cash. That funding is owned by Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

The plan is for Belgium to be shielded with a guarantee covering 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.

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

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote unanimously every six months to renew the freeze, which could have meant a ongoing 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 "immediate threat to the economic interests of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is insistent it remains a strong supporter of Ukraine, but sees legal risks in the plan and worries about being left to handle the consequences if things go wrong.

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

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

Although the EU might be able to arrange sufficient guarantees for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

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

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

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to get ironclad guarantees for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions in another way, as part of its own diplomatic proposal.

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

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