Russia Responds at the EU's Proposal to Loan Immobilized Russian Funds to Ukraine

Kyiv remains depleting its cash to keep going its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the next two years is found in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Russian officials warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.

'Just' to Employ Russia's Assets, Argue Ukraine and the EU

In total, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.

The EU and Ukraine argue that that capital should be used to reconstruct what Russia has devastated: The European Commission calls it a "reconstruction loan" and has come up with a plan to prop up Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "allow Ukraine to protect itself successfully against subsequent Russian attacks".

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

Belgium is anxious it will be saddled with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

The Details of the EU's Strategy?

The EU is racing against time prior to next Thursday's summit to agree on a compromise that Belgium can accept.

So far the EU has avoided accessing the assets themselves directly but since last year has transferred the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is under sanction and the returns are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• One is to borrow the funds on capital markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it requires 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 lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now largely been converted into cash. That capital is owned by Euroclear located within the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and claims it is assured it has resolved them.

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

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

If Russia targeted Belgium itself, any ruling by a Russian court would not be accepted 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.

Until now they have had to vote by consensus every six months to renew 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 stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains Convinced

The Belgian government is firm it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things go wrong.

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

"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.

While the EU might be able to secure adequate assurances for the loan itself, Belgium fears an added risk of being vulnerable to extra damages or penalties.

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

"Financial institutions need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's another reason why it's so important for Belgium to obtain water-tight assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

Time is of the essence, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and politically realistic 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 insistent its money should not be touched, there are added concerns among leaders in Europe that the US may want to use Russia's blocked funds in another way, 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 aware the US has been holding discussions with Russia about future co-operation.

A preliminary version 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