Moscow Responds at the EU's Proposal to Lend Frozen Russian Cash to Kyiv

Kyiv remains running out of funding to keep going its armed forces and economy, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Employ Russia's Funds, Assert Kyiv and Brussels

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

Brussels and Kyiv contend that that capital should be used to reconstruct what Russia has devastated: Brussels refers to it as a "reparations loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

Authorities in Brussels is anxious it will be left with an huge bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister 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.

Explaining the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has avoided touching the frozen capital 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 deemed less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to pay for a large portion of its funding needs.

• One is to borrow the funds on the markets, backed by the EU budget as a surety. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has valid worries and claims it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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.

In the event that Russia took legal action against Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a ongoing 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 "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and fears being forced to deal with the fallout if things fail.

A usually partisan political environment in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

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

While the EU might be able to secure enough protections for the loan itself, Belgium fears an further exposure of being vulnerable to extra damages or penalties.

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 make one enormous loan. 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 solvent. And if things fail it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain ironclad assurances for Euroclear."

Europe Facing Strain from Every Direction

There is no time to lose, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the financially feasible and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is unyielding its money should not be touched, there are added concerns among European figures that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about potential collaboration.

An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving