Russia Responds at the EU's Plan to Loan Frozen Russian Assets to Kyiv

Ukraine is facing a severe shortage of cash to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the answer to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a final decision is made.

'Just' to Employ Moscow's Funds, Say Kyiv and Brussels

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

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has destroyed: EU officials calls it a "reparations loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be left with an huge bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time before next Thursday's summit to finalize a arrangement that Belgium can agree to.

Previously the EU has avoided accessing the frozen capital directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

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

There are currently two EU proposals seeking to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be challenging when Budapest and Bratislava object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now largely been converted into cash. That funding is Euroclear property held in the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

The scheme is for Belgium to be protected with a insurance applying to all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

Until now they have had to vote all together every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Not Yet On Board

Brussels is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the fallout if things do not work out.

A normally partisan political environment 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 – consider if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure adequate protections for the loan itself, Belgium worries about an added risk of being subject to extra damages or penalties.

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

"Lenders need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to get absolute protections for Euroclear."

Europe Under Pressure from Every Direction

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

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are further worries among leaders in Europe that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

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

A preliminary version of the US peace plan suggested $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving