Moscow Responds at the EU's Plan to Loan Frozen Moscow's Assets to Kyiv

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

From the EU's perspective, the remedy to addressing Kyiv's funding gap of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to finalize the plan at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Utilize Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has about €210bn of its funds blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that those funds should be used to rebuild what Russia has devastated: The European Commission 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 destroyed – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

Russia's court action was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is worried it will be left with an massive bill if it all backfires, and Euroclear head Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has held off touching the principal funds directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as safe as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the deficit caused by 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 financial requirements.

• Option one is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely matured into cash. That funding is Euroclear property located within the European Central Bank.

The European Commission acknowledges Belgium has valid worries and says it is assured it has resolved them.

The scheme is for Belgium to be protected with a guarantee covering 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 judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus 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 "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is adamant it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and is concerned about being shouldering the fallout if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to arrange enough assurances for the loan itself, Belgium is concerned about an added risk of being subject to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to comply with prudential rules 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 save Euroclear. That's a further cause why it's so crucial for Belgium to get absolute guarantees for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a fiscally viable and practically possible 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 afterwards. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions differently, as part of its own peace initiative.

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

An early draft 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