Moscow Responds at Europe's Scheme to Lend Frozen Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of financial resources to sustain its armed forces and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the following biennium lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their meeting in Brussels next week.

Russian officials caution the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Employ Russia's Assets, Say Ukraine and the EU

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

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has devastated: Brussels refers to it as a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to protect itself successfully against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

The Belgian government is anxious it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

The EU is under pressure prior to next Thursday's summit to finalize a arrangement that Belgium can agree to.

Until now the EU has avoided accessing the principal funds directly but starting in 2024 has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

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

• One is to raise the money on the markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now largely matured into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has justified fears and claims it is confident it has resolved them.

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

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

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

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Still Not On Board

The Belgian government is insistent it remains a staunch ally of Ukraine, but identifies legal risks in the plan and is concerned about being forced to deal with the consequences if things fail.

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

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

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

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get absolute guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be used, there are added concerns among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

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

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