Moscow Responds at Europe's Plan to Loan Immobilized Moscow's Assets to Kyiv

Ukraine is facing a severe shortage of funding to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the solution to plugging Kyiv's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to give it the green light at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

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

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

European and Ukrainian authorities maintain that those funds should be used to reconstruct what Russia has devastated: Brussels refers to it as a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself efficiently against future Russian attacks".

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

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

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

Belgian Prime Minister 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.

What is the EU's Plan?

European Union officials is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has avoided using the principal funds directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to furnishing Ukraine with €90bn, to finance a majority of its financial requirements.

• One is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now mostly been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and states it is assured it has resolved them.

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

Should Euroclear suffer a loss 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 took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely 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 ongoing risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is insistent it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the consequences if things do not work out.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange sufficient guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to adhere to prudential rules 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 stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to obtain absolute guarantees for Euroclear."

Europe Under Pressure from Every Direction

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and politically achievable solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to use Russia's frozen billions in another way, 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 cognizant the US has been engaging with Russia about future co-operation.

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