Moscow Hits Back at Europe's Scheme to Lend Frozen Moscow's Assets to Ukraine

Ukraine is facing a severe shortage of funding to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

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 held by Belgian bank Euroclear, and Brussels hope to sign that off at their meeting in Brussels next week.

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

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

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

Brussels and Kyiv contend that money should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has devised 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 money then becomes ours," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

The Belgian government is concerned it will be saddled with an huge 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 estimated €16-17bn locked 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 endorse the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

Brussels is under pressure ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has avoided touching the principal funds directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, 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 cover the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at supplying Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now predominantly turned into cash. That capital is Euroclear property held in the European Central Bank.

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

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

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

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being left to handle the fallout if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is about €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain enough protections for the loan itself, Belgium worries about an added risk of being exposed to extra damages or penalties.

Prof Colaert also argues the requirement for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Financial institutions need to follow 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 fail it would be up to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

EU Leaders Under Pressure from Every Direction

There is no time to lose, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and practically possible solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

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

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

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