Moscow Retaliates at the EU's Plan to Loan Frozen Russian Cash to Kyiv

Ukraine is facing a severe shortage of cash to keep going its armed forces and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the solution to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Employ Moscow's Assets, Argue Ukraine and the EU

Overall, Russia has roughly €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that that capital should be used to restore what Russia has destroyed: The European Commission refers to it as a "loan for reparations" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself successfully against future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is concerned it will be saddled with an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

So far the EU has refrained from accessing the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is considered safe as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to providing Ukraine with €90bn, to finance a majority of its financial requirements.

• Option one is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly been converted into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is confident it has resolved them.

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

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

In the event that Russia targeted Belgium itself, any decision 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 indefinitely.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is firm it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being shouldering the consequences if things go wrong.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain absolute guarantees for Euroclear."

Europe Under Pressure from Multiple Fronts

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be touched, there are added concerns among leaders in Europe that the US may want to use Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

An initial document of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving