Moscow Responds at the EU's Proposal to Lend Immobilized Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to plugging Ukraine's funding gap of €135.7bn for the next two years lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Utilize Moscow's Assets, Argue Ukraine and the EU

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

European and Ukrainian authorities argue that money should be used to restore what Russia has devastated: Brussels terms it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is concerned it will be burdened by an huge bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

Brussels is under pressure ahead of next Thursday's summit to agree on a arrangement that Belgium can support.

Previously the EU has refrained from using the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is deemed permissible as Russia is under sanction and the proceeds are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options designed to supplying Ukraine with €90bn, to finance a large portion of its financial requirements.

• One is to raise the money on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and claims it is convinced it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

Should Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe permanently.

Previously they have had to vote all together every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Convinced

Brussels is firm it remains a committed partner of Ukraine, but identifies legal risks in the plan and is concerned about being left to handle the fallout if things fail.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

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

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute guarantees for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "the most fiscally viable 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 next. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to use Russia's blocked funds in another way, as part of its own diplomatic proposal.

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

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