Russia Hits Back at the EU's Plan to Lend Immobilized Moscow's Funds to Ukraine

Ukraine is depleting its cash to sustain its military and economy afloat, after nearly four years of Russia's full-scale war.

In the view of European leaders, the remedy to filling Ukraine's budget hole of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders hope to give it the green light at their Brussels summit next week.

Russian officials warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Utilize Russia's Funds, Assert Ukraine and the EU

Overall, Russia has about €210bn of its assets blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to shield itself effectively against subsequent Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is anxious it will be saddled with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to 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 Proposal?

Brussels is working to the wire ahead of next Thursday's summit to agree on a solution that Belgium can accept.

Previously the EU has held off using the principal funds directly but for the past year has transferred the "windfall profits" 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 returns are not property of the Russian state.

But foreign defense assistance 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 options designed to providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it needs 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 lending Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now predominantly been converted into cash. That funding is an asset of Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and says it is convinced it has dealt with them.

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

If Euroclear incur losses 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.

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

In a key development, 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 continue the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic security of the union" continues.

The Reasons Belgium is Remains Convinced

Brussels is adamant it remains a staunch ally of Ukraine, but perceives legal risks in the plan and is concerned about being shouldering the fallout if things do not work out.

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

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to obtain enough assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra legal costs.

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

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

"Why do we have these banking laws? It's because we want banks to be secure. 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 water-tight assurances for Euroclear."

EU Leaders Under Pressure from All Sides

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"It's a matter of destiny for us," states leading German conservative MP Norbert Röttgen. "If we fail, 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 unyielding its money should not be accessed, there are additional apprehensions among European figures that the US may want to deploy Russia's immobilized billions differently, as part of its own peace initiative.

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

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