Russia Hits Back at the EU's Scheme to Loan Frozen Russian Cash to Ukraine

Kyiv remains running out of funding to maintain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to addressing Kyiv's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels aim to finalize the plan at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Argue European and Ukrainian Officials

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

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has destroyed: EU officials terms it a "loan for reparations" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself successfully against subsequent Russian attacks".

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

Belgium is worried it will be saddled with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

What is the EU's Proposal?

European Union officials is under pressure prior to next Thursday's summit to finalize a solution that Belgium can accept.

Previously the EU has held off accessing the frozen capital directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is seen as safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to furnishing Ukraine with €90bn, to cover two-thirds of its funding needs.

• The first is to secure the capital on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were originally held in securities but have now largely turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is confident it has dealt with them.

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

If Euroclear incur losses 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 decision by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Remains Convinced

The Belgian government is firm it remains a committed partner of Ukraine, but sees legal risks in the plan and worries about being forced to deal with the fallout if things go wrong.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so crucial for Belgium to secure absolute protections for Euroclear."

The European Union Under Pressure from All Sides

There is no time to lose, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most economically realistic and practically possible 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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