Moscow Retaliates at Europe's Proposal to Lend Frozen Russian Cash to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the answer to filling Kyiv's funding gap of €135.7bn for the coming 24 months is found in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Russian officials caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Appropriate' to Use Moscow's Assets, Assert Kyiv and Brussels

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

European and Ukrainian authorities argue that those funds should be used to restore what Russia has laid waste to: EU officials calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself efficiently against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Plan?

Brussels is working to the wire ahead of next Thursday's summit to finalize a arrangement that Belgium can support.

So far the EU has avoided touching the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to raise the money on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and states it is confident it has resolved them.

The plan is for Belgium to be safeguarded with a insurance 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 clearing house which are in the EU.

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

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and is concerned about being left to handle the consequences if things fail.

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

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

While the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an added risk of being exposed to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to provide a loan to the EU would violate EU banking regulations.

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just 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 become the responsibility of Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain absolute assurances for Euroclear."

EU Leaders Under Pressure from All Sides

There is no time to lose, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most economically realistic and politically achievable solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be touched, there are further worries among leaders in Europe that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

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