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

Kyiv remains running out of funding to maintain its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the coming 24 months lies in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their meeting in Brussels next week.

Russian officials state the EU plan would be an act of theft, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Utilize Moscow's Funds, Argue Ukraine and the EU

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

The EU and Ukraine maintain that those funds should be used to restore what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €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," says Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is dissatisfied.

The Belgian government is anxious it will be saddled with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

Brussels is working to the wire before next Thursday's summit to finalize a solution that Belgium can agree to.

Previously the EU has refrained from using the principal funds directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the interest is seen as safe as Russia is subject to sanctions and the proceeds are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to make up the deficit resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU proposals designed to providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to secure the capital on the markets, guaranteed by the EU budget as a collateral. This is Belgium's first choice but it requires a consensus by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were originally held in financial instruments but have now predominantly turned into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is convinced it has resolved them.

The plan is for Belgium to be protected with a insurance covering 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 clearing house which are in the EU.

In the event that Russia targeted Belgium itself, any judgment 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 permanently.

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

The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Still Not On Board

Belgium is firm it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the fallout if things fail.

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

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

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium worries about an additional danger of being vulnerable to extra legal costs.

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

"Banks need to comply with prudential rules and shouldn't put all their eggs in one basket. 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 stable. And if things turn sour it would be up to Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad protections for Euroclear."

EU Leaders In a Difficult Position from All Sides

There is no time to lose, warn seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the fiscally viable and practically possible solution".

"It's a matter of destiny for us," says 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 insistent its money should not be used, there are further worries among EU officials that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about future co-operation.

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