Russia Hits Back at Europe's Plan to Lend Immobilized Moscow's Funds to Kyiv

Ukraine is running out of cash to maintain its military and economy, after almost four years of Russia's full-scale war.

For Europe, the answer to addressing Ukraine's funding gap of €135.7bn for the next two years rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Russian officials state the EU plan would be an illegal seizure, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Russia's Assets, Argue Kyiv and Brussels

Overall, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that those funds should be used to rebuild what Russia has destroyed: Brussels refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to defend itself effectively against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is concerned it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "presents significant risks" for his country.

Explaining the EU's Strategy?

The EU is under pressure prior to next Thursday's summit to agree on a arrangement that Belgium can agree to.

Until now the EU has refrained from accessing the principal funds directly but for the past year has paid the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is deemed permissible as Russia is under sanction and the proceeds are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• Option one is to raise the money on the markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it needs a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now largely been converted into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has valid worries and states it is convinced it has addressed them.

The proposal is for Belgium to be shielded with a assurance encompassing 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.

If Russia took legal action against Belgium itself, any decision by a Russian court would not be enforced 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 for the foreseeable future.

Heretofore they have had to vote by consensus every six months to extend 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 financial well-being of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is firm it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and fears being shouldering the repercussions if things go wrong.

A typically partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure enough protections for the loan itself, Belgium worries about an added risk of being exposed to extra legal costs.

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

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is asking Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things fail it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to obtain ironclad assurances for Euroclear."

The European Union Facing Strain from Multiple Fronts

The situation is urgent, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the financially feasible and politically achievable solution".

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

Although Russia is unyielding its money should not be used, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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