Moscow Hits Back at the EU's Proposal to Loan Immobilized Russian Cash to Kyiv

Ukraine is depleting its funding to sustain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's budget hole of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders hope to finalize the plan at their meeting in Brussels next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Use Moscow's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine contend that that capital should be used to restore what Russia has destroyed: The European Commission terms it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.

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

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

Belgium is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgium's PM 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 Proposal?

Brussels is working to the wire before next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has avoided accessing the assets themselves directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• Option one is to borrow the funds on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and claims it is confident it has addressed them.

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

Should Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote all together every six months to renew 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 "clear risk to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being shouldering the repercussions if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

"Banks need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure absolute assurances for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and politically realistic solution".

"It is a decisive moment for us," warns 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".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

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