Russia Hits Back at the EU's Scheme to Loan Frozen Russian Assets to Kyiv

Ukraine is facing a severe shortage of cash to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Kyiv's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets held by Belgian bank Euroclear, and European Union officials aim to give it the green light 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 announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Assets, Assert Ukraine and the EU

All told, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine contend that money should be used to reconstruct what Russia has laid waste to: EU officials calls it a "reparations loan" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

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

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

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is concerned.

Belgium is worried it will be left with an huge bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is working to the wire before next Thursday's summit to agree on a solution that Belgium can support.

So far the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is seen as permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to make up the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans designed to supplying Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• Option one is to raise the money on capital markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now mostly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and says it is assured it has dealt with them.

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

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a significant move, 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 by consensus every six months to extend 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 continue to be immobilized as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Not Yet On Board

Brussels is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being shouldering the fallout if things do not work out.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"Belgium has a modest-sized economy. 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 obtain adequate guarantees for the loan itself, Belgium worries about an further exposure of being subject to extra legal costs.

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

"Lenders need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so important for Belgium to get absolute assurances for Euroclear."

Europe Facing Strain from Every Direction

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

"It is a decisive moment for us," says 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".

Although Russia is adamant its money should not be accessed, there are further worries among EU officials that the US may want to employ Russia's blocked funds differently, as part of its own peace plan.

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

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