Russia Responds at Europe's Plan to Loan Immobilized Moscow's Cash to Ukraine

Kyiv remains facing a severe shortage of funding to maintain its armed forces and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Kyiv's budget hole of €135.7bn for the next two years is found in frozen Russian assets held by Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an act of theft, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Moscow's Assets, Say Ukraine and the EU

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

Brussels and Kyiv argue that money should be used to restore what Russia has laid waste to: The European Commission refers to it as a "reparations loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz says the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".

Russia's court action was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is concerned it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has held off touching the frozen capital directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as safe as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the shortfall left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options designed to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in financial instruments but have now largely been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive acknowledges Belgium has valid worries and says it is convinced it has dealt with them.

The proposal 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, the shortfall would be covered 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.

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to continue 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 "clear risk to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Belgium is adamant it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things fail.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

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

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

"Banks need to follow prudential rules and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things fail 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."

Europe Facing Strain from All Sides

The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and practically possible solution".

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

Although Russia is unyielding its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to Russia about potential collaboration.

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