Russia Responds at the EU's Plan to Lend Immobilized Russian Funds to Kyiv

Ukraine is running out of cash to maintain its armed forces and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Use Russia's Funds, Argue European and Ukrainian Officials

Overall, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that those funds should be used to reconstruct what Russia has laid waste to: EU officials calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

Belgium is worried it will be burdened by 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 roughly €16-17bn frozen in Russia.

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has refrained from touching the principal funds directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is deemed safe as Russia is under sanction and the proceeds are not Russian sovereign property.

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 all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to furnishing Ukraine with €90bn, to finance a majority of its funding needs.

• One is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were initially held in bonds but have now predominantly matured into cash. That money is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is assured it has resolved them.

The plan is for Belgium to be safeguarded 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 settlement agency which are in the EU.

Should Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being left to handle the consequences if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure adequate assurances for the loan itself, Belgium worries about an further exposure of being exposed to extra fines or liabilities.

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

"Lenders need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get water-tight protections for Euroclear."

EU Leaders Under Pressure from Multiple Fronts

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically realistic 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 subsequently. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, there are added concerns among leaders in Europe that the US may want to use Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about possible partnership.

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