Moscow Responds at the EU's Proposal to Loan Immobilized Moscow's Assets to Ukraine

Ukraine is running out of financial resources to keep going its armed forces and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the answer to filling Ukraine's funding gap of €135.7bn for the coming 24 months lies in Moscow's immobilized funds located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week.

Russian officials state the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Only Fair' to Employ Moscow's Funds, Say European and Ukrainian Officials

Overall, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has destroyed: The European Commission terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

"It is appropriate 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.

Germany's leader Friedrich Merz states the assets will "help Ukraine to protect itself successfully against future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is anxious it will be left with an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the world's financial order".

Euroclear also has an approximate €16-17bn immobilised 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 reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to come up with a solution that Belgium can support.

So far the EU has refrained from using the principal funds directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is seen as safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to supplying Ukraine with €90bn, to finance a majority of its funding needs.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly matured into cash. That funding is owned by Euroclear held in the European Central Bank.

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

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

If Euroclear incur losses 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.

Should Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

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

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is insistent it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being left to handle the repercussions if things do not work out.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

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

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Financial institutions need to follow prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would fall to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to get water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "a fiscally viable and practically possible solution".

"It is a decisive moment for us," states 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 reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are further worries among European figures that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

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

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