Moscow Responds at Europe's Plan to Loan Frozen Russian Funds to Kyiv

Ukraine is facing a severe shortage of funding to sustain its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to addressing Kyiv's budget hole of €135.7bn for the next two years is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

Brussels and Kyiv maintain that that capital should be used to restore what Russia has laid waste to: The European Commission terms it a "reconstruction loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself effectively against future Russian attacks".

Russia's court action was expected in Brussels. But it is not just Moscow that is concerned.

Belgium is worried it will be saddled with an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Plan?

Brussels is under pressure before next Thursday's summit to finalize a solution that Belgium can accept.

So far the EU has held off touching the principal funds directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as less risky as Russia is under sanction and the earnings are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at furnishing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to borrow the funds on capital markets, secured against the EU budget as a surety. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now predominantly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has justified fears and states it is convinced it has resolved them.

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

Should Euroclear incur losses 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.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Heretofore they have had to vote unanimously every six months to extend 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 remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government 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 repercussions if things fail.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to secure enough guarantees for the loan itself, Belgium fears an further exposure of being exposed to extra fines or liabilities.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to secure absolute guarantees for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, caution a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable 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 afterwards. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own peace initiative.

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

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