Russia Hits Back at Europe's Scheme to Lend Frozen Moscow's Cash to Ukraine

Kyiv remains running out of cash to maintain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Ukraine's funding gap of €135.7bn for the next two years is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Utilize Russia's Assets, Assert Ukraine and the EU

All told, Russia has roughly €210bn of its assets frozen in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine maintain that those funds should be used to reconstruct what Russia has destroyed: The European Commission calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy valued at €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

Russia's court action was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is worried it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

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

Explaining the EU's Plan?

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

So far the EU has held off using the frozen capital directly but since last year has directed the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed less risky as Russia is subject to sanctions and the returns are not property of the Russian state.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at furnishing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• The first is to raise the money on financial markets, secured against the EU budget as a surety. This is Belgium's favored solution but it requires a agreement by all by EU leaders and that would be difficult when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now largely matured into cash. That funding is owned by Euroclear located within the European Central Bank.

The European Commission acknowledges Belgium has legitimate concerns and states it is confident it has addressed them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are poised to endorse on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

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 expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains Satisfied

Brussels is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being shouldering the repercussions if things do not work out.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

"The Belgian economy is not large. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange adequate protections for the loan itself, Belgium fears an further exposure of being exposed to extra damages or penalties.

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

"Lenders need to follow stability regulations and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to get ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Every Direction

The situation is urgent, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most fiscally viable and politically realistic solution".

"This is a crucial test for us," warns 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".

While Russia is adamant its money should not be touched, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions differently, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been holding discussions with Russia about possible partnership.

A preliminary version of the US peace plan mentioned $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving