Russia Hits Back at the EU's Scheme to Lend Immobilized Moscow's Cash to Kyiv

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy afloat, after close to 48 months of Russia's full-scale war.

In the view of European leaders, the answer to plugging Kyiv's financial shortfall of €135.7bn for the next two years is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders aim to finalize the plan at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Appropriate' to Use Russia's Funds, Say European and Ukrainian Officials

In total, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that those funds should be used to restore what Russia has devastated: The European Commission terms it a "reparations loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to protect itself effectively against any future Russian attacks".

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

The Belgian government is concerned it will be left with an massive bill if it all goes wrong, and Euroclear head Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

Belgium's PM Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has left open the possibility of legal action if it "poses significant risks" for his country.

The Details of the EU's Plan?

The EU is racing against time ahead of next Thursday's summit to finalize a compromise that Belgium can agree to.

So far the EU has refrained from using the assets themselves directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the interest is deemed permissible as Russia is under sanction and the returns are not property of the Russian state.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the deficit resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to providing Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly turned into cash. That capital is an asset of Euroclear held in the European Central Bank.

The European Commission recognizes Belgium has justified fears and states it is assured it has resolved them.

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

If Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

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

In a significant move, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an emergency clause 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.

The Reasons Belgium is Not Yet Convinced

The Belgian government is adamant it remains a committed partner of Ukraine, but identifies legal risks in the plan and worries about being forced to deal with the repercussions if things do not work out.

A usually divided political landscape in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine 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 enough assurances for the loan itself, Belgium fears an additional danger of being subject to extra damages or penalties.

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"What is the purpose of 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 save Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight protections for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a economically realistic and politically realistic solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be touched, there are added concerns among EU officials that the US may want to use Russia's frozen billions differently, as part of its own peace plan.

Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about potential collaboration.

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