Moscow Responds at Europe's Scheme to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is facing a severe shortage of financial resources to maintain its military and economy, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the answer to plugging Kyiv's budget hole of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and Brussels hope 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 Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Appropriate' to Use Russia's Funds, Assert Kyiv and Brussels

In total, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv contend that money should be used to rebuild what Russia has devastated: EU officials calls it a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "help Ukraine to defend itself effectively against subsequent Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

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

Until now the EU has held off accessing the principal funds directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• The first is to raise the money on capital markets, secured against the EU budget as a collateral. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly been converted into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has valid worries and states it is convinced it has addressed them.

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

If 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.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be accepted 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.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the fallout if things fail.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure adequate assurances for the loan itself, Belgium fears an additional danger of being subject to extra fines or liabilities.

Prof Colaert also believes the demand for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Lenders need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight guarantees for Euroclear."

The European Union In a Difficult Position from All Sides

Time is of the essence, caution several EU member states including those bordering 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's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among European figures that the US may want to use Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

A preliminary version of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving