Moscow Retaliates at the EU's Proposal to Loan Frozen Russian Cash to Kyiv

Kyiv remains depleting its cash to sustain its military and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to addressing Ukraine's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

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

'Just' to Utilize Moscow's Assets, Assert Kyiv and Brussels

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that money should be used to restore what Russia has devastated: Brussels refers to it as a "reparations loan" and has come up with 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," states Ukraine's Volodymyr Zelensky.

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

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

Authorities in Brussels is worried it will be left with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the world's financial order".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can accept.

Previously the EU has held off touching the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as safe as Russia is under sanction and the returns are not property of the Russian state.

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

There are at the moment two EU proposals aimed at providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly been converted into cash. That capital is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is assured it has addressed them.

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

Should Euroclear incur losses 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 decision by a Russian court would not be enforced in the EU.

In a significant move, 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 ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is adamant it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and is concerned about being forced to deal with the fallout if things fail.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

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

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

"Banks need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"Why do we have these financial regulations? 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 water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a financially feasible and politically achievable solution".

"It's a matter of destiny 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".

Although Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

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

A preliminary version 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