Moscow Responds at the EU's Proposal to Loan Frozen Russian Cash to Ukraine

Ukraine is running out of funding to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

For Europe, the solution to filling Ukraine's funding gap of €135.7bn for the next two years is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Russia's Assets, Argue Kyiv and Brussels

All told, Russia has approximately €210bn of its funds immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has laid waste to: Brussels calls it a "loan for reparations" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is worried it will be left with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

European Union officials is racing against time ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has held off using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed permissible as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to providing Ukraine with €90bn, to finance a majority of its funding needs.

• Option one is to raise the money on capital markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally 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 EU's executive acknowledges Belgium has legitimate concerns and claims it is confident it has addressed them.

The scheme is for Belgium to be protected with a guarantee covering all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency 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 significant move, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Belgium is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being left to handle the consequences if things fail.

A typically partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium worries about an added risk of being subject to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to obtain ironclad protections for Euroclear."

Europe In a Difficult Position from Every Direction

The situation is urgent, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the economically realistic and practically possible solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 adamant its money should not be touched, there are added concerns among European figures that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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