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

Kyiv remains running out of funding to maintain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to filling Kyiv's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Use Russia's Funds, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that money should be used to rebuild what Russia has devastated: EU officials refers to it as a "reparations loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself successfully against future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

The Details of the EU's Plan?

European Union officials is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can support.

Previously the EU has held off touching the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is considered less risky as Russia is under sanction and the returns are not property of the Russian state.

But global military support for Ukraine has fallen significantly 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 at the moment two EU plans designed to furnishing Ukraine with €90bn, to cover a large portion of its funding needs.

• The first is to raise the money on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly matured into cash. That capital is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has justified fears and claims it is confident it has resolved them.

The scheme is for Belgium to be safeguarded with a guarantee encompassing 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 settlement agency which are in the EU.

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

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

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning 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 economic interests of the union" continues.

Why Belgium is Still Not On Board

Brussels is adamant it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and fears being forced to deal with the repercussions if things fail.

A typically fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to secure ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from Every Direction

The situation is urgent, warn 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 financially feasible and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be used, there are further worries among European figures that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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