Russia Responds at the EU's Scheme to Lend Frozen Russian Funds to Ukraine

Kyiv remains running out of cash to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to plugging Kyiv's budget hole of €135.7bn for the next two years lies in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders hope to sign that off at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Use Moscow's Funds, Argue European and Ukrainian Officials

All told, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv contend that that capital should be used to restore what Russia has devastated: The European Commission calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "help Ukraine to defend itself effectively against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

The Belgian government is concerned it will be left with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has avoided using the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is considered safe as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

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

• Option one is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now largely matured into cash. That money is Euroclear property held in the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident it has resolved them.

The proposal is for Belgium to be shielded with a assurance applying to 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 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 permanently block Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote unanimously every six months to continue 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 stay blocked as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

Belgium is insistent it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and is concerned about being forced to deal with the fallout if things fail.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Banks need to follow prudential rules and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to get ironclad assurances for Euroclear."

The European Union In a Difficult Position 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 maintain the proposal to use Russian funds is "the most economically realistic and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be used, there are added concerns among European figures that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

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