Moscow Hits Back at Europe's Plan to Loan Frozen Russian Funds to Ukraine

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

From the EU's perspective, the answer to plugging Kyiv's financial shortfall of €135.7bn for the coming 24 months rests with frozen Russian assets held by Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

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

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine maintain that those funds should be used to restore what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate 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.

Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself successfully against future 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 left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

Euroclear also has an estimated €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 accept the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is racing against time before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided accessing the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is seen as less risky as Russia is sanctioned and the returns are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• Option one is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now mostly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident it has dealt with them.

The plan is for Belgium to be safeguarded with a guarantee applying to 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.

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

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

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the consequences if things go wrong.

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

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most financially feasible and practically possible solution".

"It's a matter of destiny for us," says 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about potential collaboration.

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