Russia Responds at the EU's Proposal to Lend Immobilized Moscow's Funds to Ukraine

Ukraine is running out of cash to maintain its military and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the remedy to addressing Ukraine's funding gap of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Russian officials warn the EU plan would be an confiscation, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Utilize Moscow's Assets, Say European and Ukrainian Officials

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

Brussels and Kyiv contend that those funds should be used to restore what Russia has destroyed: The European Commission calls it a "loan for reparations" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

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

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be left with an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

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

So far the EU has held off accessing the assets themselves directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is deemed safe as Russia is sanctioned and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at furnishing Ukraine with €90bn, to cover a large portion of its financial requirements.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were initially held in securities but have now predominantly turned into cash. That money is Euroclear property held in the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is confident it has addressed them.

The plan is for Belgium to be safeguarded with a guarantee encompassing 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.

Should Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

Heretofore 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 planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Remains On Board

Brussels is firm it remains a committed partner of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things do not work out.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange enough assurances for the loan itself, Belgium fears an additional danger of being exposed to extra damages or penalties.

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

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

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

Europe Facing Strain from Every Direction

The situation is urgent, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the fiscally viable and politically realistic solution".

"It is a decisive moment for us," says 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 insistent its money should not be used, there are added concerns among European figures that the US may want to deploy Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about future co-operation.

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