Russia Responds at Europe's Plan to Loan Frozen Russian Cash to Ukraine

Kyiv remains running out of cash to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

For Europe, the remedy to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to sign that off at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Appropriate' to Employ Moscow's Assets, Assert Ukraine and the EU

Overall, Russia has about €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities maintain that that capital should be used to reconstruct what Russia has devastated: EU officials refers to it as a "reconstruction loan" and has come up with a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz says the assets will "help Ukraine to shield itself effectively against any future Russian attacks".

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

Belgium is anxious it will be burdened by an massive bill if it all goes wrong, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "rational, reasonable, and justified 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.

Explaining the EU's Strategy?

Brussels is working to the wire before next Thursday's summit to agree on a compromise that Belgium can support.

So far the EU has held off accessing the principal funds directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is deemed permissible as Russia is subject to sanctions and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options designed to furnishing Ukraine with €90bn, to cover a majority of its financial requirements.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it requires a consensus by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were initially held in securities but have now predominantly matured into cash. That capital is owned by Euroclear located within the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and states it is assured it has resolved them.

The plan is for Belgium to be safeguarded 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 clearing house which are in the EU.

In the event that 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 poised to endorse on Friday to freeze indefinitely 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 renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is firm it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and fears being forced to deal with the repercussions if things go wrong.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €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 obtain adequate guarantees for the loan itself, Belgium fears an further exposure of being subject to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute guarantees for Euroclear."

Europe In a Difficult Position from Multiple Fronts

There is no time to lose, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most financially feasible and practically possible solution".

"This is a crucial test 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 finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are further worries among EU officials that the US may want to use Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery 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 frozen assets being used by the US for reconstruction, with the US {taking|receiving