Russia Hits Back at the EU's Proposal to Loan Immobilized Moscow's Cash to Kyiv

Ukraine is depleting its financial resources to sustain its military and economy, 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 rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to sign that off at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a definitive agreement is made.

'Just' to Utilize Moscow's Funds, Assert Ukraine and the EU

All told, Russia has about €210bn of its funds immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that those funds should be used to reconstruct what Russia has laid waste to: The European Commission calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

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

Belgium is worried it will be saddled with an huge bill if it all backfires, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

Euroclear also has an roughly €16-17bn frozen 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.

The Details of the EU's Strategy?

Brussels is under pressure before next Thursday's summit to finalize a arrangement that Belgium can support.

So far the EU has refrained from using the assets themselves directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU proposals aimed at furnishing Ukraine with €90bn, to pay for a majority of its funding needs.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in securities but have now mostly been converted into cash. That capital is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is assured it has addressed them.

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

Should Euroclear suffer a loss 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 ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote all together every six months to continue 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 "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is adamant it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being forced to deal with the repercussions if things fail.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

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

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

"Banks need to comply with prudential rules and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain water-tight protections for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the economically realistic and politically realistic 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 afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to use Russia's immobilized billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions 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.

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