Russia Hits Back at Europe's Plan to Loan Frozen Russian Cash to Ukraine

Ukraine is facing a severe shortage of financial resources to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to addressing Ukraine's budget hole of €135.7bn for the next two years lies in Moscow's immobilized funds held by 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 confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Employ Russia's Assets, Argue Kyiv and Brussels

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

The EU and Ukraine contend that that capital should be used to rebuild what Russia has destroyed: EU officials refers to it as a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz says the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is anxious it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the global financial architecture".

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

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

The Details of the EU's Plan?

Brussels is under pressure ahead of next Thursday's summit to agree on a solution that Belgium can support.

Until now the EU has refrained from touching the assets themselves directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered permissible as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• One is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is convinced it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Previously they have had to vote by consensus every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

Belgium is adamant it remains a committed partner of Ukraine, but sees legal risks in the plan and is concerned about being left to handle the repercussions if things fail.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to secure sufficient assurances for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

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

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

"Why do we have these financial regulations? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to secure water-tight protections for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, caution a group of 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 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 afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

An initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving