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

Kyiv remains depleting its financial resources to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the answer to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Use Moscow's Funds, Argue Kyiv and Brussels

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

Brussels and Kyiv maintain that those funds should be used to rebuild what Russia has laid waste to: Brussels refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

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

German Chancellor Friedrich Merz states the assets will "allow Ukraine to protect itself efficiently against future Russian attacks".

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

Authorities in Brussels is concerned it will be saddled with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the world's financial order".

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

Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

Explaining the EU's Strategy?

Brussels is working to the wire prior to next Thursday's summit to agree on a solution that Belgium can agree to.

So far the EU has avoided accessing the principal funds directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered permissible as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the shortfall resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• One is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires 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 frozen Russian funds, which were at first held in securities but have now mostly turned into cash. That money is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is convinced it has dealt with them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

Should Russia went after Belgium itself, any decision 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 for the foreseeable future.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Brussels is adamant it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and fears being left to handle the consequences if things do not work out.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

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

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Banks need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

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

Europe Facing Strain from Multiple Fronts

There is no time to lose, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible and politically achievable solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among leaders in Europe 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 working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about possible partnership.

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