Russia Responds at the EU's Plan to Loan Immobilized Russian Cash to Ukraine

Kyiv remains facing a severe shortage of cash to keep going its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to plugging Ukraine's financial shortfall of €135.7bn for the following biennium is found in frozen Russian assets held by Belgian bank Euroclear, and European Union officials aim to finalize the plan at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Appropriate' to Use Moscow's Assets, Say Kyiv and Brussels

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

Brussels and Kyiv contend that those funds should be used to rebuild what Russia has laid waste to: EU officials terms it a "reparations loan" and has devised a plan to bolster Ukraine's economy amounting to €90bn.

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

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

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

Authorities in Brussels is concerned it will be left with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted 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.

What is the EU's Plan?

The EU is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can support.

Previously the EU has held off using the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to cover the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals seeking to providing Ukraine with €90bn, to pay for a majority of its financial requirements.

• The first is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were initially held in securities but have now largely turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

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

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are expected to agree 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 emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is adamant it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries 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 under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to obtain adequate protections for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also contends the stipulation for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking 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 be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to get water-tight guarantees for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a economically realistic and politically achievable solution".

"It's a matter of destiny 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 insistent its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions differently, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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