🔗 Share this article Moscow Retaliates at the EU's Proposal to Loan Frozen Moscow's Funds to Ukraine Ukraine is facing a severe shortage of funding to sustain 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 coming 24 months lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week. Russian officials caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made. 'Just' to Employ Russia's Funds, Assert European and Ukrainian Officials All told, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear. Brussels and Kyiv contend that money should be used to restore what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn. "It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky. Germany's leader Friedrich Merz argues the assets will "allow Ukraine to defend itself effectively against future Russian attacks". The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned. Authorities in Brussels is anxious it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order". Euroclear also has an roughly €16-17bn immobilised 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 not excluded legal action if it "carries significant risks" for his country. The Details of the EU's Strategy? Brussels is racing against time ahead of next Thursday's summit to agree on a compromise that Belgium can agree to. Previously the EU has avoided using the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as less risky as Russia is sanctioned and the earnings are not Russian sovereign property. But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump. There are currently two EU options seeking to supplying Ukraine with €90bn, to finance two-thirds of its funding needs. One is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military. The alternative is loaning Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly turned into cash. That funding is owned by Euroclear located within the European Central Bank. The European Commission recognizes Belgium has valid worries and says it is confident it has dealt with them. The proposal is for Belgium to be safeguarded with a guarantee 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 settlement agency which are in the EU. In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU. As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently. Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium. The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues. Why Belgium is Not Yet On Board Belgium is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being shouldering the consequences if things go wrong. A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders. "Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University. While the EU might be able to secure sufficient assurances for the loan itself, Belgium is concerned about an further exposure of being subject to extra damages or penalties. Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations. "Banks need to comply with prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that. "What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute protections for Euroclear." EU Leaders Under Pressure from All Sides The situation is urgent, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and politically achievable solution". "This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time". Although Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized 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 engaging with Russia about potential collaboration. A preliminary version of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving
Ukraine is facing a severe shortage of funding to sustain 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 coming 24 months lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders aim to sign that off at their Brussels summit next week. Russian officials caution the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made. 'Just' to Employ Russia's Funds, Assert European and Ukrainian Officials All told, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is in the custody of Euroclear. Brussels and Kyiv contend that money should be used to restore what Russia has laid waste to: EU officials refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy amounting to €90bn. "It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukraine's Volodymyr Zelensky. Germany's leader Friedrich Merz argues the assets will "allow Ukraine to defend itself effectively against future Russian attacks". The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is concerned. Authorities in Brussels is anxious it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "disrupt the world's financial order". Euroclear also has an roughly €16-17bn immobilised 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 not excluded legal action if it "carries significant risks" for his country. The Details of the EU's Strategy? Brussels is racing against time ahead of next Thursday's summit to agree on a compromise that Belgium can agree to. Previously the EU has avoided using the frozen capital directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is seen as less risky as Russia is sanctioned and the earnings are not Russian sovereign property. But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the deficit resulting from the US decision to largely cease funding Ukraine under President Donald Trump. There are currently two EU options seeking to supplying Ukraine with €90bn, to finance two-thirds of its funding needs. One is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military. The alternative is loaning Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly turned into cash. That funding is owned by Euroclear located within the European Central Bank. The European Commission recognizes Belgium has valid worries and says it is confident it has dealt with them. The proposal is for Belgium to be safeguarded with a guarantee 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 settlement agency which are in the EU. In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be enforced in the EU. As an important step, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently. Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a constant risk to Belgium. The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues. Why Belgium is Not Yet On Board Belgium is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being shouldering the consequences if things go wrong. A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders. "Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University. While the EU might be able to secure sufficient assurances for the loan itself, Belgium is concerned about an further exposure of being subject to extra damages or penalties. Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations. "Banks need to comply with prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that. "What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to obtain absolute protections for Euroclear." EU Leaders Under Pressure from All Sides The situation is urgent, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a fiscally viable and politically achievable solution". "This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to reach an agreement in a week's time". Although Russia is insistent its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized 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 engaging with Russia about potential collaboration. A preliminary version of the US peace plan referred to $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving