Moscow Retaliates at Europe's Proposal to Loan Immobilized Moscow's Cash to Kyiv

Kyiv remains facing a severe shortage of financial resources to keep going its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

For Europe, the answer to filling Kyiv's funding gap of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their Brussels summit next week.

Authorities in Russia 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 conclusive plan is made.

'Appropriate' to Employ Moscow's Assets, Say Ukraine and the EU

All told, Russia has roughly €210bn of its state reserves 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 devastated: EU officials refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

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

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

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is concerned it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

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

So far the EU has refrained from touching the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as permissible as Russia is sanctioned and the earnings are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly turned into cash. That capital is owned by Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and says it is confident it has resolved them.

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

If Euroclear suffer a loss 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.

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted 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 indefinitely.

Until now 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 remain frozen as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is adamant it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being left to handle the consequences 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 other European officials.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to carry a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure sufficient protections for the loan itself, Belgium is concerned about an further exposure of being subject to extra damages or penalties.

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

"Banks need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. 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 turn sour it would be up to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and politically realistic solution".

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

While Russia is insistent its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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