Moscow Hits Back at Europe's Plan to Loan Immobilized Moscow's Cash to Ukraine

Ukraine is depleting its cash to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to plugging Ukraine's funding gap of €135.7bn for the following biennium lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels seek to sign that off at their Brussels summit next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Moscow's Funds, Argue Ukraine and the EU

Overall, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself efficiently against future Russian attacks".

Russia's court action was expected in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is worried it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

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

What is the EU's Proposal?

Brussels is racing against time before next Thursday's summit to agree on a arrangement that Belgium can accept.

Until now the EU has refrained from using the principal funds directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to finance a majority of its financial requirements.

• One is to raise the money on the markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and claims it is assured it has resolved them.

The plan is for Belgium to be shielded with a insurance covering all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit 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 went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

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

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Brussels is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things fail.

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

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. 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 stable. And if things turn sour it would be up to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and practically possible solution".

"It's a matter of destiny for us," states 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 touched, there are added concerns among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

An initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving