Russia Hits Back at Europe's Scheme to Lend Immobilized Russian Funds to Kyiv

Ukraine is facing a severe shortage of cash to maintain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the solution to filling Kyiv's budget hole of €135.7bn for the following biennium lies in frozen Russian assets located within Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Employ Russia's Assets, Argue European and Ukrainian Officials

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

The EU and Ukraine contend that that capital should be used to rebuild what Russia has laid waste to: Brussels terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be saddled with an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the world's financial order".

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

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

What is the EU's Plan?

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

Until now the EU has held off using the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is considered permissible as Russia is sanctioned and the earnings are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to borrow the funds on financial markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now mostly turned into cash. That funding is owned by Euroclear held in the European Central Bank.

Brussels' executive arm accepts Belgium has valid worries and says it is confident 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.

Should Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house 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 immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning 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 Remains On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being shouldering the fallout if things go wrong.

A typically divided political landscape in this case has come together in support of 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 carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient assurances for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to follow prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

Time is of the essence, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

While Russia is insistent its money should not be used, there are further worries among leaders in Europe that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about future co-operation.

An initial document 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