Russia Responds at Europe's Scheme to Loan Immobilized Moscow's Cash to Kyiv

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

In the view of European leaders, the answer to filling Ukraine's funding gap of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and EU leaders aim to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Employ Russia's Assets, Say European and Ukrainian Officials

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

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

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to protect itself efficiently against any future Russian attacks".

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

Belgium is worried it will be burdened by an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to finalize a arrangement that Belgium can agree to.

Until now the EU has held off touching the assets themselves directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as permissible as Russia is sanctioned and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options designed to furnishing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• The first is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely been converted into cash. That funding is owned by Euroclear deposited at the European Central Bank.

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

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

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

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote all together every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set 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 Convinced

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

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to arrange enough assurances for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra legal costs.

Prof Colaert also contends the demand for Euroclear to provide a loan to the EU would contravene 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 precisely that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to get water-tight protections for Euroclear."

Europe Under Pressure from Multiple Fronts

The situation is urgent, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be touched, there are further worries among EU officials that the US may want to employ Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also aware the US has been talking to Russia about possible partnership.

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