Moscow Responds at the EU's Proposal to Loan Immobilized Moscow's Assets to Kyiv

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

In the view of European leaders, the solution to filling Ukraine's budget hole of €135.7bn for the next two years lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Use Russia's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has laid waste to: Brussels terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

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

German Chancellor Friedrich Merz argues the assets will "allow Ukraine to shield itself successfully against any future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is unhappy.

Belgium is anxious it will be burdened by an enormous bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has avoided accessing the frozen capital directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is deemed safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were at first held in securities but have now largely matured into cash. That funding is owned by Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and states it is confident it has dealt with them.

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

If Euroclear incur losses 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.

Should Russia took legal action against Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is firm it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and is concerned about being left to handle the repercussions if things do not work out.

A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough assurances for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

"Financial institutions need to comply with prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to get ironclad protections for Euroclear."

Europe In a Difficult Position from Multiple Fronts

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a economically realistic and practically possible solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions differently, as part of its own peace plan.

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

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