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

Kyiv remains depleting its funding to maintain its military and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Ukraine's funding gap of €135.7bn for the following biennium is found in Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders seek to give it the green light at their Brussels summit next week.

Authorities in Russia warn the EU plan would be an confiscation, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Employ Russia's Assets, Argue Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to restore what Russia has laid waste to: Brussels terms it a "loan for reparations" and has devised a plan to prop up Ukraine's economy to the tune of €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that money then becomes ours," states Ukraine's Volodymyr Zelensky.

German Chancellor Friedrich Merz argues the assets will "enable Ukraine to shield itself efficiently against future Russian attacks".

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

Authorities in Brussels is concerned it will be burdened by an enormous bill if it all goes wrong, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the world's financial order".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse 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 Proposal?

The EU is working to the wire ahead of next Thursday's summit to agree on a arrangement that Belgium can agree to.

So far the EU has avoided using the principal funds directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is seen as permissible as Russia is sanctioned and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to compensate for the gap resulting from the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals seeking to providing Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• The first is to secure the capital on capital markets, guaranteed by the EU budget as a surety. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava oppose funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were originally held in securities but have now predominantly turned into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and states it is assured it has dealt with them.

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

If Euroclear suffer a loss 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 went after Belgium itself, any decision by a Russian court would not be recognized in the EU.

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

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 set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is firm it remains a staunch ally of Ukraine, but perceives legal risks in the plan and worries about being shouldering the repercussions if things fail.

A normally divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange adequate assurances for the loan itself, Belgium fears an added risk of being vulnerable to extra legal costs.

Prof Colaert also argues the requirement for Euroclear to provide a loan to the EU would contravene EU banking regulations.

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

"What is the purpose of these bank rules? It's because we want banks to be solvent. And if things fail it would fall to Belgium to save Euroclear. That's an additional reason why it's so vital for Belgium to secure ironclad guarantees for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

There is no time to lose, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and politically achievable solution".

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

While Russia is unyielding its money should not be touched, there are added concerns among EU officials that the US may want to employ Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

An early draft of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving