Moscow Hits Back at Europe's Plan to Lend Immobilized Russian Cash to Kyiv

Kyiv remains depleting its cash to sustain its armed forces and economy afloat, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Russian officials warn the EU plan would be an act of theft, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Moscow's Funds, Say European and Ukrainian Officials

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has laid waste to: Brussels terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself efficiently against subsequent Russian attacks".

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

The Belgian government is worried it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

Brussels is racing against time prior to next Thursday's summit to come up with a arrangement that Belgium can agree to.

Previously the EU has held off accessing the frozen capital directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as less risky as Russia is under sanction and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the shortfall caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options seeking to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• One is to secure the capital on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were originally held in bonds but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and says it is confident it has addressed them.

The plan is for Belgium to be shielded with a guarantee 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 clearing house which are in the EU.

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

As an important step, 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 unanimously every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Not Yet Satisfied

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

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

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

"Banks need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to get absolute assurances for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most financially feasible and practically possible solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 accessed, there are further worries among European figures 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 working with Europe and the US on a recovery fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

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