Moscow Responds at Europe's Proposal to Lend Immobilized Moscow's Assets to Ukraine

Ukraine is depleting its funding to keep going its military and economy, after almost four years of the ongoing invasion by Moscow.

For Europe, the answer to plugging Kyiv's budget hole of €135.7bn for the next two years lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels hope to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Employ Russia's Funds, Argue European and Ukrainian Officials

In total, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that that capital should be used to reconstruct what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

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

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

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

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to finalize a compromise that Belgium can accept.

So far the EU has avoided using the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is deemed safe as Russia is sanctioned and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

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

• The first is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now largely matured into cash. That funding is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is convinced it has dealt with them.

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

Should Russia targeted Belgium itself, any judgment by a Russian court would not be recognized in the EU.

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

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

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

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

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

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to get absolute protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the financially feasible and politically achievable 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 finalize the deal in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among EU officials that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace plan.

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

A preliminary version 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