Moscow Responds at the EU's Proposal to Lend Immobilized Russian Cash to Kyiv

Ukraine is facing a severe shortage of cash to maintain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the solution to plugging Ukraine's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

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

'Only Fair' to Use Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine argue that those funds should be used to rebuild what Russia has destroyed: Brussels terms it a "reparations loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to defend itself successfully against future Russian attacks".

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

Authorities in Brussels is anxious it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

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

Previously the EU has refrained from accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed permissible as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly turned into cash. That funding is Euroclear property located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is confident it has resolved them.

The scheme is for Belgium to be safeguarded with a assurance covering all the €210bn of Russian assets in the EU.

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

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be recognized 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 permanently.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a ongoing 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.

Why Belgium is Not Yet On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but perceives legal risks in the plan and worries about being shouldering the repercussions if things fail.

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

"The Belgian economy is not large. Belgian GDP is about €565bn – think about if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain adequate assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

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

"Financial institutions need to follow stability regulations and shouldn't put all their eggs in one basket. 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 go wrong it would be up to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

The European Union Facing Strain from Every Direction

There is no time to lose, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is insistent its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has said Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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