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

Kyiv remains depleting its funding to maintain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months is found in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Moscow's representatives state the EU plan would be an act of theft, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Use Moscow's Assets, Argue European and Ukrainian Officials

In total, Russia has about €210bn of its state reserves blocked in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that money should be used to rebuild what Russia has devastated: The European Commission terms it a "reconstruction loan" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself efficiently against subsequent Russian attacks".

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

Belgium is worried it will be burdened by an massive bill if it all backfires, and Euroclear head Valérie Urbain argues using the assets could "undermine the global financial architecture".

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 reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can accept.

Until now the EU has held off touching the principal funds directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as safe as Russia is subject to sanctions and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to compensate for the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options aimed at furnishing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to secure the capital on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now predominantly turned into cash. That capital is an asset of Euroclear deposited at the European Central Bank.

The European Commission recognizes Belgium has justified fears and says it is confident it has resolved them.

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

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

Should Russia targeted Belgium itself, any ruling by a Russian court would not be recognized in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning 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.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a committed partner of Ukraine, but sees legal risks in the plan and worries about being left to handle the consequences if things do not work out.

A typically divided political landscape in this case has united behind Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – think about if it would need to carry a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to secure sufficient assurances for the loan itself, Belgium worries about an additional danger of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's a further cause why it's so important for Belgium to obtain ironclad guarantees for Euroclear."

The European Union Facing Strain from All Sides

There is no time to lose, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a financially feasible and politically achievable solution".

"It's a matter of destiny 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 reach an agreement in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating 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.

A preliminary version of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving