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

Ukraine is running out of funding to keep going its armed forces and economy afloat, after nearly four years of the ongoing invasion by Moscow.

For Europe, the solution to addressing Ukraine's financial shortfall of €135.7bn for the next two years is found in frozen Russian assets located within Belgian bank Euroclear, and Brussels seek to sign that off at their meeting in Brussels 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 even before a definitive agreement is made.

'Only Fair' to Utilize Russia's Funds, Say Kyiv and Brussels

In total, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv maintain that money should be used to restore what Russia has devastated: The European Commission refers to it as a "reconstruction loan" and has devised a plan to prop up Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself successfully against future Russian attacks".

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

The Belgian government is anxious it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can support.

Previously the EU has refrained from accessing the assets themselves directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is seen as safe 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 struggled to cover the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• One is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now largely matured into cash. That funding is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has legitimate concerns and states it is assured it has resolved them.

The plan is for Belgium to be safeguarded with a assurance applying to 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.

If Russia went after Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote unanimously every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Convinced

Brussels is adamant it remains a staunch ally of Ukraine, but sees legal risks in the plan and is concerned about being shouldering the repercussions if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about 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 obtain adequate protections for the loan itself, Belgium fears an additional danger of being vulnerable to extra damages or penalties.

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

"Financial institutions need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to secure absolute assurances for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, warn several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is adamant its money should not be used, there are further worries among EU officials that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

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

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