Moscow Hits Back at Europe's Scheme to Lend Immobilized Moscow's Cash to Kyiv

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

From the EU's perspective, the answer to addressing Ukraine's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Only Fair' to Utilize Russia's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities contend that that capital should be used to restore what Russia has devastated: The European Commission terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

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

Russia's court action was anticipated in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all fails, 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.

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

The EU is racing against time prior to next Thursday's summit to agree on a solution that Belgium can support.

Previously the EU has refrained from using the principal funds directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options aimed at furnishing Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now mostly turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is assured it has resolved them.

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

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

If Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing 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 financial well-being of the union" continues.

Why Belgium is Remains On Board

Belgium is firm it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an added risk of being subject to extra fines or liabilities.

Prof Colaert also believes the stipulation 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 telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to secure ironclad assurances for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, caution seven 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".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are further worries among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about possible partnership.

An early draft 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