Moscow Hits Back at Europe's Proposal to Loan Frozen Moscow's Assets to Ukraine

Ukraine is facing a severe shortage of funding to keep going its armed forces and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the answer to plugging Kyiv's funding gap of €135.7bn for the following biennium is found in frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Utilize Moscow's Funds, Argue Kyiv and Brussels

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has destroyed: EU officials calls it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

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

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

Authorities in Brussels is concerned it will be saddled with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the world's financial order".

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

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

The Details of the EU's Proposal?

Brussels is racing against time before next Thursday's summit to come up with a compromise that Belgium can accept.

So far the EU has avoided accessing the principal funds directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is under sanction and the returns are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now predominantly been converted into cash. That capital is Euroclear property held in the European Central Bank.

The European Commission accepts Belgium has justified fears and claims it is confident it has resolved them.

The proposal is for Belgium to be protected with a assurance covering all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

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

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are set to use an extraordinary measure 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.

Why Belgium is Not Yet On Board

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

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure enough guarantees for the loan itself, Belgium is concerned about an further exposure of being subject to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

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

The European Union Under Pressure from Every Direction

There is no time to lose, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and practically possible solution".

"It is a decisive moment for us," states 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 unyielding its money should not be touched, there are additional apprehensions among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

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

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