Russia Hits Back at Europe's Proposal to Lend Immobilized Moscow's Cash to Ukraine

Ukraine is running out of financial resources to keep going its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to filling Kyiv's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Russian officials state the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Employ Russia's Funds, Say Ukraine and the EU

Overall, Russia has roughly €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities maintain that money should be used to reconstruct what Russia has laid waste to: Brussels calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "allow Ukraine to shield itself effectively 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 worried it will be burdened by an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

The leader of Belgium Bart de Wever has set the EU 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 "presents significant risks" for his country.

What is the EU's Plan?

Brussels is under pressure ahead of next Thursday's summit to come up with a compromise that Belgium can accept.

Previously the EU has refrained from accessing the principal funds directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is considered less risky as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• The first is to borrow the funds on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in bonds but have now mostly been converted into cash. That funding is Euroclear property held in the European Central Bank.

The EU's executive recognizes Belgium has valid worries and says it is confident it has dealt with them.

The scheme is for Belgium to be shielded with a guarantee 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.

In the event that Russia targeted Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a constant 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 "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Remains Satisfied

Belgium is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being left to handle the repercussions if things go wrong.

A usually divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to arrange sufficient assurances for the loan itself, Belgium fears an additional danger of being exposed to extra fines or liabilities.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things fail it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad assurances for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and politically realistic solution".

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

While 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 blocked funds for another purpose, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working 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.

A preliminary version of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving