Moscow Hits Back at the EU's Scheme to Loan Frozen Moscow's Funds to Ukraine

Ukraine is running out of funding to sustain its armed forces and economy, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Employ Moscow's Funds, Assert European and Ukrainian Officials

Overall, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that money should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €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 Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against subsequent Russian attacks".

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

Authorities in Brussels is anxious it will be burdened by an massive bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

The EU is working to the wire before next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has avoided using the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed less risky as Russia is under sanction and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• Option one is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were initially held in bonds but have now mostly been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and claims it is convinced it has addressed them.

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

Should Euroclear incur losses 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.

If Russia went after Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is insistent it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being shouldering the repercussions if things fail.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium worries about an additional danger of being exposed to extra legal costs.

Prof Colaert also contends the demand for Euroclear to grant a loan 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 instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to get water-tight protections for Euroclear."

Europe Facing Strain from All Sides

The situation is urgent, caution seven 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 economically realistic and politically realistic solution".

"It is a decisive moment 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 used, there are additional apprehensions among EU officials that the US may want to employ Russia's blocked funds in another way, as part of its own peace initiative.

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

An initial document of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving