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 military and economy afloat, after nearly four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Ukraine's budget hole of €135.7bn for the following biennium lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an act of theft, 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 Utilize Moscow's Funds, Say Ukraine and the EU

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has devastated: The European Commission calls it a "reparations loan" and has proposed a plan to prop up 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 money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

The legal move by Moscow was expected in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

The EU is working to the wire ahead of next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has held off touching the assets themselves directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as less risky as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to raise the money on financial markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were originally held in securities but have now predominantly turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims it is confident it has resolved them.

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

If 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.

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

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote all together every six months to continue the freeze, which could have meant a constant 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 "direct danger to the economic interests of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is insistent it remains a committed partner of Ukraine, but identifies legal risks in the plan and fears being forced to deal with the fallout if things fail.

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

"The Belgian economy is not large. Belgian GDP is about €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 arrange adequate protections for the loan itself, Belgium is concerned about an further exposure of being subject to extra legal costs.

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to secure absolute protections for Euroclear."

The European Union Under Pressure from Every Direction

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the financially feasible and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

While Russia is insistent its money should not be used, there are further worries among EU officials that the US may want to use Russia's frozen billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

An initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving