Moscow Responds at the EU's Scheme to Lend Immobilized Russian Assets to Kyiv

Ukraine is running out of cash to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the answer to plugging Ukraine's funding gap of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Moscow's representatives state 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 definitive agreement is made.

'Only Fair' to Use Russia's Assets, Argue Ukraine and the EU

Overall, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that money should be used to reconstruct what Russia has devastated: EU officials calls it a "reconstruction loan" and has come up with a plan to bolster 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 money then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself successfully against subsequent Russian attacks".

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

Belgium is concerned it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to finalize a arrangement that Belgium can agree to.

Previously the EU has refrained from using the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is considered permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• Option one is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely matured into cash. That money is an asset of Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is convinced it has resolved them.

The scheme is for Belgium to be protected with a insurance 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 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 permanently block Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is insistent it remains a committed partner of Ukraine, but sees legal risks in the plan and fears being left to handle the consequences if things go wrong.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

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

Prof Colaert also contends the requirement for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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