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

Kyiv remains running out of funding to keep going its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Utilize Russia's Funds, Assert Ukraine and the EU

All told, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that money should be used to restore what Russia has destroyed: Brussels calls it a "reconstruction loan" and has come up with a plan to prop up 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 money then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against subsequent Russian attacks".

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

Belgium is concerned it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

Euroclear also has an approximate €16-17bn locked in Russia.

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to come up with a solution that Belgium can agree to.

Previously the EU has avoided touching the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed less risky as Russia is subject to sanctions and the returns are not property of the Russian state.

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

There are presently two EU proposals seeking to providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to raise the money on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in bonds but have now predominantly matured into cash. That money is Euroclear property deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is assured it has resolved them.

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

Should Euroclear face a financial hit 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 went after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

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

Until now they have had to vote all together every six months to continue the freeze, which could have meant a ongoing 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 "clear risk to the financial well-being of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is firm it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the fallout if things do not work out.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra fines or liabilities.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to secure absolute guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

Time is of the essence, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the financially feasible and practically possible solution".

"This is a crucial test for us," states 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 succeed in a week's time".

While Russia is unyielding its money should not be used, there are further worries among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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