Moscow Responds at the EU's Proposal to Loan Frozen Russian Cash to Kyiv

Kyiv remains running out of funding to keep going its armed forces and economy, after almost four years 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 is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Moscow's representatives state the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Employ Moscow's Assets, Say Kyiv and Brussels

Overall, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: The European Commission refers to it as a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "allow Ukraine to defend itself effectively against future Russian attacks".

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

The Belgian government is worried it will be left with an massive bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Plan?

Brussels is working to the wire prior to next Thursday's summit to finalize a arrangement that Belgium can accept.

Previously the EU has refrained from accessing the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as less risky as Russia is under sanction and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options seeking to providing Ukraine with €90bn, to finance a large portion of its funding needs.

• The first is to borrow the funds on the markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now predominantly turned into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and claims it is assured it has addressed them.

The proposal 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 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 recognized 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 permanently.

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 continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the fallout if things fail.

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

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

While the EU might be able to secure enough assurances for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to grant a loan to the EU would violate EU banking regulations.

"Banks need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing 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 become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure ironclad guarantees for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the fiscally viable and politically achievable solution".

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

Although Russia is insistent its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's blocked funds for another purpose, as part of its own peace plan.

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

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