Moscow Responds at the EU's Plan to Lend Immobilized Moscow's Cash to Kyiv

Kyiv remains running out of financial resources to sustain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the solution to plugging Ukraine's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their EU leaders' conference next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Say European and Ukrainian Officials

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has devastated: EU officials refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," states Ukrainian President Volodymyr Zelensky.

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

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

Belgium is concerned it will be saddled with an massive bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

Brussels is under pressure before next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has avoided using the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed permissible as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• Option one is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has justified fears and states it is confident it has resolved them.

The plan is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

In a significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the repercussions if things do not work out.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

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

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

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable 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 subsequently. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

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

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving