Russia Hits Back at the EU's Scheme to Loan Frozen Moscow's Funds to Kyiv

Kyiv remains running out of cash to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

For Europe, the solution to plugging Ukraine's funding gap of €135.7bn for the following biennium is found in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to sign that off at their EU leaders' conference next week.

Russian officials state the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

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

All told, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities contend that those funds should be used to restore what Russia has devastated: EU officials terms it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "help Ukraine to protect itself effectively against subsequent Russian attacks".

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

Belgium is concerned it will be left with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials is racing against time prior to next Thursday's summit to finalize a solution that Belgium can accept.

So far the EU has avoided touching the principal funds directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is seen as less risky as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly been converted into cash. That capital is Euroclear property deposited at the European Central Bank.

The European Commission acknowledges Belgium has valid worries and states it is confident it has resolved them.

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

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency 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 significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains On Board

Belgium is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and worries about being left to handle the repercussions if things go wrong.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to obtain enough protections for the loan itself, Belgium is concerned about an additional danger of being exposed to extra legal costs.

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

"Financial institutions need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely 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 bail out Euroclear. That's another reason why it's so crucial for Belgium to obtain absolute assurances for Euroclear."

EU Leaders In a Difficult Position from Every Direction

Time is of the essence, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most financially feasible and practically possible solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be used, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds differently, as part of its own diplomatic proposal.

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 future co-operation.

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