Russia Hits Back at the EU's Plan to Lend Immobilized Russian Cash to Kyiv

Ukraine is facing a severe shortage of financial resources to keep going its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the remedy to filling Kyiv's funding gap of €135.7bn for the coming 24 months lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Authorities in Russia state the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

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

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

Brussels and Kyiv maintain that that capital should be used to reconstruct what Russia has destroyed: EU officials calls it a "reconstruction 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 devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to protect 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 anxious it will be saddled with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

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

So far the EU has refrained from accessing the assets themselves directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is deemed safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the shortfall left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options aimed at providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• One is to raise the money on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now predominantly matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is convinced it has resolved them.

The proposal is for Belgium to be shielded with a insurance 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 settlement agency which are in the EU.

In the event that 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.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains Satisfied

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and fears being left to handle the consequences if things fail.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium worries about an additional danger of being exposed to extra damages or penalties.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.

"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. 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 solvent. And if things fail it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to secure absolute protections for Euroclear."

Europe Under Pressure from Multiple Fronts

Time is of the essence, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be used, there are added concerns among leaders in Europe that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

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