Russia Hits Back at the EU's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is depleting its financial resources to maintain its military and economy, after close to 48 months of the ongoing invasion by Moscow.

From the EU's perspective, the answer to plugging Ukraine's budget hole of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their EU leaders' conference next week.

Russian officials state the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Moscow's Assets, Argue Ukraine and the EU

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

Brussels and Kyiv contend that that capital should be used to restore what Russia has laid waste to: Brussels terms it a "reparations loan" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

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

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

Explaining the EU's Proposal?

European Union officials is racing against time prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Until now the EU has avoided accessing the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is considered safe as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply 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 presently two EU plans seeking to furnishing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to secure the capital on the markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now predominantly matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and says it is confident it has resolved them.

The plan is for Belgium to be shielded with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear suffer a loss 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 went after Belgium itself, any judgment by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not Satisfied

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

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

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

While the EU might be able to secure adequate protections for the loan itself, Belgium fears an further exposure of being subject to extra legal costs.

Prof Colaert also argues the demand for Euroclear to grant a loan to the EU would breach 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 exactly that.

"Why do we have these financial regulations? It's because we want banks to be solvent. And if things fail it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to get ironclad guarantees for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to succeed in a week's time".

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

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

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