Moscow Retaliates at Europe's Proposal to Loan Frozen Moscow's Cash to Ukraine

Ukraine is facing a severe shortage of financial resources to sustain its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Russia's Assets, Argue Ukraine and the EU

All told, Russia has about €210bn of its assets immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities contend that that capital should be used to reconstruct what Russia has laid waste to: Brussels calls it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "help Ukraine to defend itself effectively against future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with 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 "carries significant risks" for his country.

What is the EU's Proposal?

European Union officials is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can support.

Until now the EU has avoided accessing the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as less risky as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at furnishing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• One is to raise the money on capital 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 oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That capital is Euroclear property located within the European Central Bank.

The European Commission accepts Belgium has justified fears and says it is assured it has addressed them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset 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 enforced 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.

Previously they have had to vote by consensus 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 continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is firm it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things do not work out.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

While the EU might be able to arrange sufficient protections for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

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

"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most financially feasible and politically achievable solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving