Moscow Retaliates at Europe's Plan to Lend Frozen Russian Cash to Kyiv

Kyiv remains depleting its cash to sustain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in frozen Russian assets located within Belgian bank Euroclear, and European Union officials hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

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

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

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has laid waste to: EU officials calls it a "reconstruction loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz states the assets will "allow Ukraine to defend itself effectively against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an enormous bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "undermine the international financial system".

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

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

Explaining the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to agree on a compromise that Belgium can accept.

Previously the EU has avoided accessing the frozen capital directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as safe as Russia is sanctioned and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at supplying Ukraine with €90bn, to cover a majority of its budgetary necessities.

• The first is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in securities but have now mostly turned into cash. That money is owned by Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is confident it has resolved them.

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

Should Euroclear suffer a loss 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 went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to continue the freeze, which could have meant a repeated risk to Belgium.

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

The Reasons Belgium is Still Not Convinced

Brussels is firm it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the consequences if things fail.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about 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 arrange enough protections for the loan itself, Belgium fears an added risk of being subject to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to provide a loan 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 telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to get absolute guarantees for Euroclear."

The European Union Facing Strain from Multiple Fronts

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

"This is a crucial test for us," states 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".

Although Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about possible partnership.

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