Russia Responds at Europe's Plan to Lend Frozen Russian Cash to Ukraine

Kyiv remains running out of cash to keep going its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to plugging Kyiv's financial shortfall of €135.7bn for the following biennium is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels aim to sign that off at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, 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 Use Russia's Assets, Say Ukraine and the EU

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: Brussels terms it a "reparations loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself efficiently against subsequent Russian attacks".

Moscow's lawsuit was foreseen 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 head Valérie Urbain warns using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to agree on a compromise that Belgium can agree to.

Until now the EU has avoided touching the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is considered less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to finance two-thirds of its financial requirements.

• The first is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly been converted into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and states it is assured it has addressed them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted 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 for the foreseeable future.

Until now they have had to vote by consensus every six months to renew 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 stay blocked as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Still Not Satisfied

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – think about if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to secure enough assurances for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

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

"Lenders need to comply with stability regulations and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do precisely that.

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

EU Leaders In a Difficult Position from Every Direction

The situation is urgent, caution a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible and politically achievable solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to succeed in a week's time".

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

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

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