Russia Hits Back at Europe's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is depleting its cash to keep going its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the solution to filling Ukraine's funding gap of €135.7bn for the following biennium is found in frozen Russian assets located within Belgian bank Euroclear, and EU leaders hope to finalize the plan at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Employ Russia's Assets, Assert Ukraine and the EU

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

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has laid waste to: EU officials terms it a "reparations loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," states Ukraine's Volodymyr Zelensky.

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

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

Belgium is concerned it will be saddled with an massive bill if it all backfires, and Euroclear head Valérie Urbain says using the assets could "undermine the global financial architecture".

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 left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to come up with a arrangement that Belgium can support.

Previously the EU has avoided touching the principal funds directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is deemed safe as Russia is sanctioned and the earnings are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

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

• One is to raise the money on financial markets, backed by the EU budget as a surety. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now largely matured into cash. That capital is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and claims it is assured it has addressed them.

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

Should Euroclear incur losses 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 accepted in the EU.

In a significant move, 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 by consensus every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Remains Satisfied

Belgium is adamant it remains a strong supporter of Ukraine, but identifies legal risks in the plan and worries about being left to handle the repercussions if things fail.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to secure adequate assurances for the loan itself, Belgium fears an further exposure of being vulnerable to extra legal costs.

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

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do just 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 be up to Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad guarantees for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, warn seven 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 politically realistic solution".

"It's a matter of destiny for us," warns 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 reach an agreement in a week's time".

While Russia is adamant its money should not be touched, there are added concerns among EU officials that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

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

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