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

Kyiv remains running out of cash to maintain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the solution to addressing Ukraine's budget hole of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their Brussels summit next week.

Russian officials warn the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Moscow's Assets, Assert European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has devised a plan to support Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself effectively against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is concerned.

Belgium is worried it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

The EU is under pressure before next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has avoided using the frozen capital directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is deemed safe as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at providing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely turned into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is assured it has addressed them.

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

If Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

Should 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 freeze indefinitely Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote by consensus every six months to renew the freeze, which could have meant a constant 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 security of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an additional danger of being vulnerable to extra legal costs.

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

"Banks need to comply with capital and liquidity requirements 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 banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and practically possible solution".

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

Although Russia is unyielding its money should not be accessed, there are added concerns among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about future co-operation.

An initial document of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving