Moscow Responds at the EU's Scheme to Loan Frozen Moscow's Funds to Kyiv

Kyiv remains facing a severe shortage of funding to keep going its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Ukraine's funding gap of €135.7bn for the following biennium rests with frozen Russian assets held by Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Assets, Assert Ukraine and the EU

All told, Russia has roughly €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv maintain that money should be used to restore what Russia has devastated: EU officials terms it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself efficiently against any future Russian attacks".

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

Belgium is worried it will be burdened by an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is racing against time prior to next Thursday's summit to agree on a arrangement that Belgium can support.

Until now the EU has held off using the assets themselves directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is considered safe as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• The first is to raise the money on the markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now mostly turned into cash. That funding is Euroclear property held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and claims it is confident it has addressed them.

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

If Euroclear suffer a loss 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.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

Heretofore they have had to vote unanimously 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 stay blocked as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is about €565bn – imagine if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain sufficient protections for the loan itself, Belgium fears an further exposure of being exposed to extra legal costs.

Prof Colaert also contends the requirement 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 put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get absolute assurances for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most economically realistic and politically achievable 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 insistent its money should not be accessed, there are further worries among European figures that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

An initial document of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving