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

Kyiv remains running out of financial resources to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels hope to finalize the plan at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Moscow's Assets, Argue Kyiv and Brussels

In total, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv maintain that that capital should be used to restore what Russia has laid waste to: 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 reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

Russia's court action was anticipated in Brussels. But it is not just Moscow that is dissatisfied.

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

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

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

Until now the EU has refrained from accessing the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is under sanction and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans seeking to providing Ukraine with €90bn, to finance a large portion of its funding needs.

• The first is to raise the money on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now mostly been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is confident it has addressed them.

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

Should Euroclear face a financial hit 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 judgment by a Russian court would not be accepted in the EU.

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

Previously they have had to vote all together every six months to continue 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 interests of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is adamant it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and worries about being shouldering the consequences if things do not work out.

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

"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Banks need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to get water-tight protections for Euroclear."

EU Leaders Facing Strain from All Sides

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

"This is a crucial test for us," warns 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 finalize the deal in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has said Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about possible partnership.

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