Moscow Responds at Europe's Plan to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is depleting its cash to keep going its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Authorities in Russia caution the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Russia's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has devastated: EU officials terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself efficiently against future Russian attacks".

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

The Belgian government is anxious it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

Euroclear also has an roughly €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 reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

Brussels is under pressure prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has refrained from accessing the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, 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 declined sharply in 2025, and Europe has had trouble trying to cover the gap caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to pay for a majority of its financial requirements.

• One is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in securities but have now largely been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has justified fears and says it is confident it has addressed them.

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

Should Euroclear incur losses 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.

If Russia went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but sees legal risks in the plan and fears being left to handle the fallout if things fail.

A usually partisan political environment 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 around €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain adequate guarantees for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra legal costs.

Prof Colaert also believes the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain absolute protections for Euroclear."

The European Union In a Difficult Position from Every Direction

There is no time to lose, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be used, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving