Russia Responds at Europe's Proposal to Lend Immobilized Moscow's Cash to Kyiv

Ukraine is running out of funding to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders aim to finalize the plan at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Utilize Moscow's Funds, Argue Kyiv and Brussels

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

Brussels and Kyiv argue that those funds should be used to restore what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has proposed a plan to support Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

The EU is racing against time ahead of next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has refrained from using the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered permissible as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to finance a majority of its funding needs.

• The first is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly been converted into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has valid worries and says it is assured it has dealt with them.

The scheme is for Belgium to be shielded with a insurance covering all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia went after Belgium itself, any decision by a Russian court would not be recognized 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 by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains Convinced

Belgium is firm it remains a committed partner of Ukraine, but sees legal risks in the plan and fears being shouldering the fallout if things do not work out.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

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

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

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and practically possible solution".

"It is a decisive moment 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace plan.

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

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