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

Ukraine is running out of funding to maintain its armed forces and economy, after nearly four years of Russia's full-scale war.

For Europe, the remedy to filling Ukraine's financial shortfall of €135.7bn for the next two years is found in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

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

'Only Fair' to Employ Russia's Assets, Argue European and Ukrainian Officials

All told, Russia has roughly €210bn of its funds frozen in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that money should be used to restore what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

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

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

Belgium is concerned it will be left with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

Brussels is under pressure prior to next Thursday's summit to finalize a arrangement that Belgium can agree to.

So far the EU has refrained from using the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at supplying Ukraine with €90bn, to finance a majority of its budgetary necessities.

• One is to raise the money on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were initially held in securities but have now predominantly turned into cash. That capital is owned by Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has valid worries and claims it is confident it has resolved them.

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

If Euroclear incur losses 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 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 set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains On Board

Brussels is adamant it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the fallout if things do not work out.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium is a small economy. Belgian GDP is around €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 secure adequate protections for the loan itself, Belgium worries about an additional danger of being vulnerable to extra damages or penalties.

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

"Banks need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to secure water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be used, there are further worries among EU officials 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 talking to Russia about potential collaboration.

An initial document 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