Russia Responds at Europe's Plan to Loan Immobilized Russian Funds to Ukraine

Ukraine is depleting its cash to keep going its armed forces and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the solution to addressing Kyiv's funding gap of €135.7bn for the coming 24 months lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels seek to sign that off at their meeting in Brussels next week.

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

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

All told, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine contend that those funds should be used to rebuild what Russia has devastated: The European Commission calls it a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy to the tune of €90bn.

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

Germany's leader Friedrich Merz says the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".

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

The Belgian government is worried it will be left with an huge bill if it all backfires, and Euroclear head Valérie Urbain argues using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure prior to next Thursday's summit to agree on a solution that Belgium can accept.

So far the EU has held off touching the frozen capital directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is seen as less risky as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has struggled to make up the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU plans aimed at furnishing Ukraine with €90bn, to finance two-thirds of its funding needs.

• One is to borrow the funds on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a agreement by all 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 Russian assets, which were initially held in financial instruments but have now predominantly turned into cash. That capital is owned by Euroclear deposited at the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is convinced it has addressed them.

The plan is for Belgium to be shielded with a assurance 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 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 expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote unanimously 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 "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Brussels is insistent it remains a committed partner of Ukraine, but perceives legal risks in the plan and is concerned about being forced to deal with the repercussions if things go wrong.

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate guarantees for the loan itself, Belgium fears an additional danger of being exposed to extra damages or penalties.

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

"Banks need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.

"What is the purpose of 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 important for Belgium to obtain ironclad guarantees for Euroclear."

Europe In a Difficult Position from Every Direction

The situation is urgent, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "a fiscally viable and practically possible 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 finalize the deal in a week's time".

Although Russia is adamant its money should not be accessed, there are additional apprehensions among leaders in Europe that the US may want to use Russia's frozen billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about future co-operation.

An early draft 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