Moscow Hits Back at Europe's Proposal to Lend Frozen Moscow's Funds to Ukraine

Ukraine is depleting its funding to sustain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to plugging Kyiv's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Argue European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to reconstruct what Russia has laid waste to: EU officials terms it a "reparations loan" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "help Ukraine to protect itself successfully against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned.

Belgium is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

The EU is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can support.

Previously the EU has avoided accessing the frozen capital directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is considered less risky as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at furnishing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• The first is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were originally held in securities but have now largely been converted into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and says it is convinced it has resolved them.

The proposal is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

Should Russia took legal action against Belgium itself, any decision 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 for the foreseeable future.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is adamant it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things do not work out.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to adhere to capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure absolute guarantees for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is insistent its money should not be accessed, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions in another way, as part of its own peace initiative.

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

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