Moscow Hits Back at Europe's Plan to Lend Immobilized Moscow's Assets to Kyiv

Kyiv remains running out of funding to sustain its military and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Kyiv's funding gap of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Utilize Moscow's Assets, Say Ukraine and the EU

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

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has devastated: EU officials calls it a "reparations loan" and has proposed a plan to bolster 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 that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

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

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain argues 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 "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

European Union officials is under pressure before next Thursday's summit to come up with a compromise that Belgium can support.

So far the EU has avoided using the frozen capital directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is deemed permissible as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at supplying Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now predominantly been converted into cash. That funding is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is assured it has addressed them.

The proposal is for Belgium to be shielded 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.

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being shouldering the repercussions if things fail.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While 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 believes the requirement for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute guarantees for Euroclear."

Europe In a Difficult Position from All Sides

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and politically realistic solution".

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

While Russia is unyielding its money should not be used, there are additional apprehensions among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own peace plan.

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 potential collaboration.

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