Moscow Responds at Europe's Proposal to Lend Frozen Russian Cash to Ukraine

Kyiv remains facing a severe shortage of cash to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the answer to addressing Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders seek to give it the green light at their EU leaders' conference next week.

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

'Only Fair' to Use Moscow's Assets, Say Ukraine and the EU

All told, 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 money should be used to restore what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has proposed a plan to bolster Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz says the assets will "allow Ukraine to shield itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

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

Previously the EU has held off touching the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as safe as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• One is to borrow the funds on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now largely been converted into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and states it is convinced it has resolved them.

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

Should Euroclear incur losses 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 took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

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

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure 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.

The Reasons Belgium is Not Yet On Board

Brussels is insistent it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and fears being left to handle the consequences if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation 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 subject to extra fines or liabilities.

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

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things fail it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get absolute assurances for Euroclear."

Europe 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 maintain the frozen assets plan is "the most fiscally viable and politically realistic solution".

"It is a decisive moment 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 succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about future co-operation.

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