Moscow Hits Back at the EU's Scheme to Loan Frozen Moscow's Assets to Kyiv

Kyiv remains depleting its funding to sustain its military and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the solution to plugging Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to give it the green light at their EU leaders' conference next week.

Russian officials warn the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

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

In total, Russia has about €210bn of its funds frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv maintain that money should be used to restore what Russia has devastated: EU officials terms it a "reconstruction loan" and has devised a plan to bolster Ukraine's economy to the tune of €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 Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

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

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is under pressure before next Thursday's summit to agree on a solution that Belgium can agree to.

Previously the EU has held off touching the frozen capital directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the profits is considered safe as Russia is subject to sanctions and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to secure the capital on financial markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it demands a consensus 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 frozen Russian funds, which were initially held in bonds but have now largely matured into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission recognizes Belgium has valid worries and says it is convinced it has dealt with them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted Belgium itself, any ruling by a Russian court would not be enforced 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 for the foreseeable future.

Previously they have had to vote all together every six months to continue the freeze, which could have meant a constant 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 economic interests of the union" continues.

The Reasons Belgium is Still Not Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and fears being left to handle the repercussions if things go wrong.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an added risk of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to bail out Euroclear. That's another reason why it's so vital for Belgium to get ironclad protections for Euroclear."

The European Union In a Difficult Position from Every Direction

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most financially feasible and practically possible solution".

"It's a matter of destiny 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 succeed in a week's time".

While Russia is insistent its money should not be touched, there are further worries among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about potential collaboration.

An initial document 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