Russia Hits Back at the EU's Scheme to Loan Immobilized Russian Cash to Ukraine

Kyiv remains depleting its cash to maintain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to filling Ukraine's funding gap of €135.7bn for the following biennium is found in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Authorities in Russia 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 ahead of a definitive agreement is made.

'Appropriate' to Use Moscow's Funds, Say Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to reconstruct what Russia has devastated: The European Commission calls it a "reconstruction loan" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate 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.

What is the EU's Strategy?

European Union officials is under pressure prior to next Thursday's summit to come up with a arrangement that Belgium can agree to.

Until now the EU has held off touching the principal funds directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is seen as permissible as Russia is sanctioned and the returns are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• One is to secure the capital on the markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it requires a unanimous vote by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were originally held in financial instruments but have now predominantly been converted into cash. That capital is Euroclear property deposited at the European Central Bank.

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

The scheme is for Belgium to be safeguarded with a insurance 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 settlement agency which are in the EU.

Should Russia went after Belgium itself, any decision by a Russian court would not be accepted 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 for the foreseeable future.

Until now they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

The Belgian government is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things fail.

A normally fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to arrange enough protections for the loan itself, Belgium worries about an added risk of being vulnerable to extra fines or liabilities.

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

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

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to bail out Euroclear. That's an additional reason why it's so important for Belgium to get ironclad assurances for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "the most fiscally viable and politically realistic solution".

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

Although Russia is insistent its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been talking to 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