Moscow Responds at Europe's Proposal to Loan Immobilized Russian Funds to Ukraine

Ukraine is depleting its funding to maintain its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

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

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

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has devastated: EU officials refers to it as a "loan for reparations" and has devised 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 devastated – and that those funds then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to shield itself effectively against subsequent Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to come up with a compromise that Belgium can agree to.

So far the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is considered permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

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

• The first is to raise the money on the markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly matured into cash. That capital is Euroclear property held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is assured it has addressed 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, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized 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 all together 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 stay blocked as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Satisfied

Belgium is adamant it remains a staunch ally of Ukraine, but identifies legal risks in the plan and is concerned about being shouldering the consequences if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient protections for the loan itself, Belgium worries about an additional danger of being subject to extra damages or penalties.

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to obtain water-tight protections for Euroclear."

The European Union Under Pressure from Every Direction

Time is of the essence, state 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 "a financially feasible and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to finalize the deal 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 employ Russia's blocked funds differently, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also cognizant the US has been talking to Russia about potential collaboration.

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