Russia Hits Back at Europe's Plan to Loan Immobilized Russian Funds to Kyiv

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

For Europe, the solution to plugging Ukraine's financial shortfall of €135.7bn for the next two years lies in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to sign that off at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority stated on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Moscow's Funds, Assert Kyiv and Brussels

All told, Russia has roughly €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 rebuild what Russia has devastated: Brussels calls it a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," says Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against subsequent Russian attacks".

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

The Belgian government is anxious it will be saddled with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the world's financial order".

Euroclear also has an estimated €16-17bn immobilised 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 "carries significant risks" for his country.

Explaining the EU's Proposal?

Brussels is racing against time ahead of next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has refrained from using the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the interest is seen as safe 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 cover the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to finance a large portion of its funding needs.

• The first is to raise the money on capital markets, secured against the EU budget as a surety. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Russian assets, which were initially held in financial instruments but have now largely turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive accepts Belgium has justified fears and claims it is convinced it has addressed them.

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not On Board

Brussels is insistent it remains a strong supporter of Ukraine, but identifies legal risks 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 fellow EU leaders.

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

Although the EU might be able to arrange adequate protections for the loan itself, Belgium fears an additional danger of being subject to extra fines or liabilities.

Prof Colaert also argues the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is asking 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 fall to Belgium to save Euroclear. That's another reason why it's so important for Belgium to get absolute protections for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most fiscally viable and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

Although Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to deploy Russia's blocked funds differently, 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 talking to Russia about future co-operation.

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