Moscow Responds at Europe's Proposal to Lend Immobilized Moscow's Cash to Kyiv

Ukraine is facing a severe shortage of cash to sustain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to plugging Ukraine's financial shortfall of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Moscow's Funds, Assert European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has laid waste to: Brussels calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has devastated – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be burdened by an enormous bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to come up with a compromise that Belgium can support.

Until now the EU has refrained from using the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• One is to borrow the funds on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly turned into cash. That capital is owned by Euroclear deposited at the European Central Bank.

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

The scheme is for Belgium to be shielded with a insurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

Heretofore 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 special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet On Board

Belgium is insistent it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an added risk of being subject to extra legal costs.

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

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

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute protections for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most fiscally viable and practically possible solution".

"It is a decisive moment for us," says 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 adamant its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about future co-operation.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving