Moscow Retaliates at the EU's Plan to Lend Frozen Moscow's Cash to Kyiv

Kyiv remains depleting its financial resources 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 addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Use Russia's Assets, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its funds blocked in the EU, and €185bn of that is held by Euroclear.

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

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is concerned.

The Belgian government is concerned it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Explaining the EU's Proposal?

The EU is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can accept.

So far the EU has refrained from touching the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is considered permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to supplying Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• Option one is to raise the money on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and says it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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.

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

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

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Brussels is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the repercussions if things fail.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

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

Prof Colaert also argues the demand 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 put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

Europe In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and practically possible 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 subsequently. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated 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 future co-operation.

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