Moscow Hits Back at Europe's Scheme to Loan Immobilized Russian Funds to Kyiv

Kyiv remains running out of funding to maintain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to addressing Kyiv's funding gap of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light 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 suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Employ Moscow's Funds, Argue Kyiv and Brussels

In total, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that money should be used to rebuild what Russia has destroyed: The European Commission terms it a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz says the assets will "help Ukraine to defend itself efficiently against future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

Brussels is racing against time before next Thursday's summit to come up with a compromise that Belgium can accept.

Previously the EU has refrained from touching the frozen capital directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to furnishing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be difficult 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 at first held in bonds but have now largely matured into cash. That capital is Euroclear property deposited at the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is convinced it has resolved them.

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

If Euroclear suffer a loss 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 went after 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 freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore 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 continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Remains On Board

Brussels is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the repercussions if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

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

Prof Colaert also contends the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure absolute guarantees for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and politically realistic 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 succeed in a week's time".

Although Russia is insistent its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about future co-operation.

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