Moscow Responds at the EU's Scheme to Loan Frozen Russian Cash to Ukraine

Ukraine is depleting its funding to keep going its military and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels hope to finalize the plan at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Use Russia's Funds, Argue Ukraine and the EU

All told, Russia has about €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has devastated: Brussels calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against any future Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is dissatisfied.

The Belgian government is concerned it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

Euroclear also has an roughly €16-17bn locked 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 reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

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

Until now the EU has avoided accessing the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed safe as Russia is sanctioned and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap left by the US decision to all but stop 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 funding needs.

• The first is to borrow the funds on financial markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely turned into cash. That funding is Euroclear property deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and says it is convinced it has addressed them.

The scheme is for Belgium to be safeguarded with a insurance 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.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote unanimously every six months to continue 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 stay blocked as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Brussels is insistent it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the consequences if things do not work out.

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

"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium fears an additional danger of being vulnerable to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and practically possible solution".

"It is a decisive moment for us," states 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 adamant its money should not be touched, there are further worries among EU officials that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving