Russia Hits Back at the EU's Proposal to Lend Immobilized Russian Funds to Ukraine

Kyiv remains running out of financial resources to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to plugging Ukraine's financial shortfall of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials hope to finalize the plan at their EU leaders' conference next week.

Russian officials state the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a definitive agreement is made.

'Just' to Use Russia's Assets, Argue European and Ukrainian Officials

In total, Russia has roughly €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

Brussels and Kyiv maintain that money should be used to restore what Russia has laid waste to: Brussels refers to it as a "reconstruction loan" and has come up with a plan to support 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 devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to shield itself efficiently against any future Russian attacks".

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

European Union officials is under pressure ahead of next Thursday's summit to finalize a solution that Belgium can support.

Previously the EU has avoided using the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is considered safe as Russia is subject to sanctions and the returns are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• One is to borrow the funds on capital markets, secured against the EU budget as a collateral. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely been converted into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has justified fears and states it is confident it has dealt with them.

The proposal is for Belgium to be shielded with a insurance covering all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

Should Russia went after Belgium itself, any ruling by a Russian court would not be enforced in the EU.

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

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

The Belgian government is insistent it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being forced to deal with the repercussions if things do not work out.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is approximately €565bn – consider 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 secure enough assurances for the loan itself, Belgium is concerned about an added risk of being subject to extra fines or liabilities.

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

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

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to obtain ironclad protections for Euroclear."

The European Union Facing Strain from All Sides

The situation is urgent, state a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and politically achievable solution".

"It's a matter of destiny for us," states 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 succeed in a week's time".

Although Russia is insistent 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 differently, as part of its own peace plan.

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

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