Russia Hits Back at Europe's Plan to Lend Immobilized Russian Funds to Kyiv

Ukraine is 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.

From the EU's perspective, the remedy to addressing Kyiv's budget hole of €135.7bn for the coming 24 months rests with Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials seek to sign that off at their EU leaders' conference next week.

Moscow's representatives state the EU plan would be an confiscation, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Use Moscow's Assets, Argue Kyiv and Brussels

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

European and Ukrainian authorities argue that that capital should be used to reconstruct what Russia has devastated: The European Commission calls it a "loan for reparations" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is appropriate that Moscow's blocked funds should be used to rebuild what Russia has devastated – and that money then becomes Ukraine's," says Ukrainian President Volodymyr Zelensky.

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

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

Authorities in Brussels is worried it will be saddled with an huge bill if it all fails, and Euroclear CEO Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted 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.

What is the EU's Plan?

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

Previously the EU has refrained from using the assets themselves directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the revenue is considered permissible as Russia is subject to sanctions and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals designed to supplying Ukraine with €90bn, to finance a majority of its budgetary necessities.

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a consensus by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now largely been converted into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has justified fears and claims it is convinced it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

Should Russia took legal action against Belgium itself, any ruling by a Russian court would not be accepted in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously 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 stay blocked as long as an "immediate threat to the financial well-being of the union" continues.

The Reasons Belgium is Remains On Board

Belgium is adamant it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and worries about being forced to deal with the repercussions if things go wrong.

A normally fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is around €565bn – imagine 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 obtain sufficient guarantees for the loan itself, Belgium worries about an added risk of being exposed to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to grant a loan to the EU would breach EU banking regulations.

"Financial institutions need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to obtain ironclad protections for Euroclear."

EU Leaders Under Pressure from Every Direction

The situation is urgent, caution seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the economically realistic and practically possible 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to use Russia's frozen billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been engaging with Russia about potential collaboration.

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