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

Ukraine is depleting its cash to keep going its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the answer to addressing Ukraine's funding gap of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an act of theft, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

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

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

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has destroyed: The European Commission refers to it as a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself successfully against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is worried it will be saddled with an massive bill if it all backfires, and Euroclear head Valérie Urbain says using the assets could "disrupt the world's financial order".

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

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

What is the EU's Plan?

The EU is under pressure before next Thursday's summit to come up with a compromise that Belgium can agree to.

Until now the EU has avoided using the assets themselves directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is deemed safe as Russia is subject to sanctions and the earnings 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 gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU plans designed to furnishing Ukraine with €90bn, to finance two-thirds of its budgetary necessities.

• The first is to raise the money on financial markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now largely been converted into cash. That funding is Euroclear property deposited at the European Central Bank.

The European Commission accepts Belgium has justified fears and says it is convinced it has resolved them.

The proposal is for Belgium to be safeguarded with a assurance covering 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.

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a significant move, 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 all together every six months to extend the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and fears being shouldering the consequences if things go wrong.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

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

Although the EU might be able to secure adequate guarantees for the loan itself, Belgium worries about an additional danger of being exposed to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to issue credit to the EU would breach EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure water-tight guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable and practically possible solution".

"This is a crucial test 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".

Although Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own diplomatic proposal.

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

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