Russia Hits Back at the EU's Proposal to Lend Immobilized Moscow's Funds to Ukraine

Kyiv remains facing a severe shortage of funding to sustain its military and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Kyiv's funding gap of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Utilize Russia's Funds, Say Ukraine and the EU

All told, Russia has approximately €210bn of its funds immobilized 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 restore what Russia has devastated: EU officials calls it a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Plan?

The EU is under pressure ahead of next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided accessing the principal funds directly but since last year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is considered permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to cover two-thirds of its financial requirements.

• Option one is to borrow the funds on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely been converted into cash. That money is Euroclear property held in the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and claims it is assured it has resolved them.

The plan is for Belgium to be shielded with a assurance encompassing all the €210bn of Russian assets in the EU.

Should 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.

If Russia targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set 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 economic security of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but sees legal risks in the plan and fears being left to handle the repercussions if things go wrong.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to obtain adequate protections for the loan itself, Belgium is concerned about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also contends the demand for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Financial institutions need to follow capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be solvent. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to get water-tight guarantees for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, state seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan 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 next. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also cognizant the US has been holding discussions 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