Moscow Responds at Europe's Plan to Lend Frozen Moscow's Assets to Ukraine

Kyiv remains running out of financial resources to keep going its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

For Europe, the answer to plugging Kyiv's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to finalize the plan at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

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

All told, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine argue that money should be used to reconstruct what Russia has devastated: The European Commission terms it a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is worried it will be left with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

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

Previously the EU has refrained from accessing the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is considered less risky as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in securities but have now largely been converted into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has justified fears and claims it is confident it has dealt with them.

The plan is for Belgium to be protected with a insurance encompassing 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 went after Belgium itself, any ruling by a Russian court would not be accepted 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.

Previously they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but sees legal risks in the plan and fears being forced to deal with the repercussions if things go wrong.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to secure enough guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra damages or penalties.

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

"Banks need to comply with prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to obtain water-tight guarantees for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although 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 frozen billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

An early draft of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving