Russia Responds at the EU's Scheme to Lend Immobilized Russian Cash to Ukraine

Ukraine is running out of funding to sustain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the remedy to filling Kyiv's budget hole of €135.7bn for the following biennium lies in Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

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

All told, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is managed by 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 proposed a plan to prop up Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is anxious it will be saddled with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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 reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

The EU is under pressure before next Thursday's summit to come up with a arrangement that Belgium can support.

Until now the EU has avoided touching the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is considered safe as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU proposals designed to providing Ukraine with €90bn, to pay for two-thirds of its funding needs.

• The first is to raise the money on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm acknowledges Belgium has legitimate concerns and claims it is convinced it has addressed them.

The plan is for Belgium to be protected with a assurance encompassing all the €210bn of Russian assets in the EU.

Should 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.

If Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not On Board

Belgium is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and fears being shouldering the repercussions if things do not work out.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to obtain adequate guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

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

"Banks need to comply with capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is telling 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 become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to obtain water-tight protections for Euroclear."

EU Leaders In a Difficult Position from Every Direction

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and practically possible solution".

"It is a decisive moment for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be used, there are further worries among EU officials that the US may want to use 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 rebuilding fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

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