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

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

From the EU's perspective, the remedy to filling Ukraine's funding gap of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders aim to sign that off at their EU leaders' conference next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Employ Moscow's Funds, Assert Ukraine and the EU

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

The EU and Ukraine argue that that capital should be used to rebuild what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to shield itself effectively against subsequent Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain says using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Plan?

European Union officials is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can agree to.

Previously the EU has avoided accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to cover a large portion of its funding needs.

• The first is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now largely turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is convinced it has addressed them.

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

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

In the event that Russia took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

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

The EU ambassadors are planning 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 security of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things go wrong.

A usually divided political landscape 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 about €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure enough assurances for the loan itself, Belgium is concerned about an further exposure of being subject to extra damages or penalties.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

Europe Under Pressure from All Sides

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

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 accessed, there are added concerns among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

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