Russia Hits Back at Europe's Plan to Loan Frozen Russian Cash to Kyiv

Kyiv remains depleting its cash to sustain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and European Union officials hope to sign that off at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Employ Moscow's Assets, Say Kyiv and Brussels

All told, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has destroyed: EU officials refers to it as a "reparations loan" and has devised a plan to support 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 those funds then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself effectively against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is concerned.

Belgium is anxious it will be burdened by an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

Explaining the EU's Plan?

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

So far the EU has held off using the frozen capital directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is seen as permissible as Russia is subject to sanctions and the returns are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to furnishing Ukraine with €90bn, to cover a large portion of its funding needs.

• One is to borrow the funds 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 problematic when two member states are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were originally held in bonds but have now predominantly matured into cash. That money is an asset of Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has justified fears and states it is convinced 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 suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are planning 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.

The Reasons Belgium is Still Not Satisfied

The Belgian government is firm it remains a strong supporter of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the repercussions if things fail.

A typically 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 is a small economy. Belgian GDP is approximately €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 obtain sufficient protections for the loan itself, Belgium is concerned about an additional danger of being vulnerable to extra damages or penalties.

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

"Financial institutions need to adhere to prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do just that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to save Euroclear. That's another reason why it's so vital for Belgium to get ironclad guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

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

"It's a matter of destiny for us," says 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 reach an agreement in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among EU officials that the US may want to use Russia's blocked funds for another purpose, as part of its own diplomatic proposal.

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

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