Moscow Responds at Europe's Plan to Lend Immobilized Russian Cash to Ukraine

Kyiv remains running out of funding to sustain 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 next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials hope to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

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

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has destroyed: Brussels calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

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

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

The Belgian government is anxious it will be burdened by an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is working to the wire before next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has refrained from accessing the principal funds directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is deemed less risky as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to providing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• The first is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were originally held in financial instruments but have now largely been converted into cash. That capital is owned by Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and states it is confident it has dealt with them.

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

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

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

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote by consensus 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 continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

Brussels is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and fears being left to handle the fallout if things go wrong.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium is concerned about an additional danger 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.

"Financial institutions need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to get ironclad protections for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are further worries among European figures that the US may want to use Russia's immobilized billions for another purpose, as part of its own peace plan.

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

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