Moscow Hits Back at the EU's Plan to Lend Immobilized Russian Cash to Ukraine

Ukraine is running out of cash to sustain its armed forces and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to plugging Kyiv's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to finalize the plan at their meeting in Brussels next week.

Russian officials state the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Use Moscow's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine contend that those funds should be used to rebuild what Russia has laid waste to: EU officials calls it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

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

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

Authorities in Brussels is anxious it will be saddled with an massive bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has set the EU 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 "presents significant risks" for his country.

The Details of the EU's Strategy?

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

Previously the EU has refrained from accessing the frozen capital directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to borrow the funds on capital markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and states it is convinced it has resolved them.

The proposal is for Belgium to be protected with a guarantee encompassing all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset 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 accepted in the EU.

As an important step, 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 all together every six months to extend 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 remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being left to handle the fallout if things fail.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

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

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium worries about an added risk of being exposed to extra damages or penalties.

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

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

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to secure absolute guarantees for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It's a matter of destiny 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 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 employ Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about possible partnership.

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