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

Kyiv remains facing a severe shortage of cash to sustain its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Ukraine's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Utilize Moscow's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has destroyed: The European Commission terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz states the assets will "allow Ukraine to protect itself effectively against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be left with an massive bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, 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 ahead of next Thursday's summit to come up with a compromise that Belgium can agree to.

Until now the EU has refrained from touching the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90bn, to pay for a large portion of its funding needs.

• One is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it needs a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and states it is assured it has resolved them.

The proposal is for Belgium to be shielded with a insurance encompassing 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.

In the event that Russia went after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet On Board

Brussels is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being left to handle the fallout if things fail.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain enough assurances for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Banks need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to obtain absolute protections for Euroclear."

The European Union Facing Strain from All Sides

Time is of the essence, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most fiscally viable and politically achievable solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, 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 unyielding its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own peace initiative.

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

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving