Russia Hits Back at Europe's Scheme to Loan Frozen Russian Cash to Ukraine

Kyiv remains running out of financial resources to sustain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to finalize the plan at their Brussels summit next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court prior to a conclusive plan is made.

'Just' to Utilize Russia's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has devastated: Brussels calls it a "loan for reparations" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

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

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be burdened by an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the world's financial order".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is working to the wire before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has held off touching the assets themselves directly but for the past year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is deemed permissible as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options seeking to providing Ukraine with €90bn, to pay for a majority of its funding needs.

• The first is to raise the money on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires a consensus by EU leaders and that would be difficult when two member states oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now mostly turned into cash. That funding is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and claims it is confident it has addressed them.

The scheme is for Belgium to be safeguarded with a guarantee encompassing all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit 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.

Should Russia took legal action against Belgium itself, any decision by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

Why Belgium is Remains On Board

Belgium is insistent it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being left to handle the repercussions if things go wrong.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

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

Although the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an further exposure of being exposed to extra legal costs.

Prof Colaert also argues 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 instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be stable. 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 secure absolute guarantees for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and politically achievable solution".

"It is a decisive moment 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 adamant its money should not be touched, 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 diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been talking to Russia about future co-operation.

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