Moscow Hits Back at the EU's Plan to Loan Immobilized Moscow's Funds to Kyiv

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the answer to plugging Kyiv's financial shortfall of €135.7bn for the following biennium rests with Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders aim to sign that off at their EU leaders' conference next week.

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

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

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

The EU and Ukraine argue that those funds should be used to rebuild what Russia has destroyed: Brussels calls it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues 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 concerned.

The Belgian government is worried it will be burdened by an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

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

Until now the EU has held off accessing the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is deemed less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

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 presently two EU options designed to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• The first is to raise the money on the markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be difficult when two member states oppose 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 been converted into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is convinced it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Belgium is insistent it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being forced to deal with the fallout if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

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

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a economically realistic and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. 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 further worries among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has stated 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 possible partnership.

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