Moscow Hits Back at the EU's Proposal to Lend Frozen Moscow's Cash to Kyiv

Kyiv remains facing a severe shortage of cash to maintain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to filling Ukraine's funding gap of €135.7bn for the coming 24 months rests with frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials aim to finalize the plan at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Use Russia's Assets, Argue Kyiv and Brussels

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

The EU and Ukraine argue that money should be used to restore what Russia has destroyed: Brussels terms it a "reconstruction loan" and has come up with 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 money then becomes ours," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "enable Ukraine to defend itself effectively against future Russian attacks".

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

Belgium is anxious it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

The EU is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Previously the EU has held off using the principal funds directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as less risky as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to supplying Ukraine with €90bn, to cover a large portion of its funding needs.

• One is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be challenging when two member states object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is confident it has resolved them.

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

Should Euroclear suffer a loss 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 ruling by a Russian court would not be enforced in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block 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 repeated risk to Belgium.

The EU ambassadors are expected 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.

The Reasons Belgium is Remains Satisfied

Brussels is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and fears being shouldering the fallout if things fail.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium is concerned about an further exposure of being exposed to extra legal costs.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to save Euroclear. That's another reason why it's so important for Belgium to secure absolute assurances for Euroclear."

EU Leaders Facing Strain from All Sides

There is no time to lose, caution several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most financially feasible and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be used, there are added concerns among leaders in Europe that the US may want to use Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about future co-operation.

An early draft of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving