Russia Hits Back at Europe's Proposal to Lend Immobilized Moscow's Cash to Kyiv

Kyiv remains facing a severe shortage of financial resources to keep going its military and economy afloat, after almost four years of Russia's full-scale war.

From the EU's perspective, the answer to filling Kyiv's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials hope to sign that off at their Brussels summit next week.

Authorities in Russia state the EU plan would be an confiscation, and the Central Bank of Russia declared on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Utilize Moscow's Funds, Argue Kyiv and Brussels

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

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has devastated: The European Commission calls it a "reparations loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be saddled with an enormous bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate 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.

Explaining the EU's Plan?

Brussels is under pressure before next Thursday's summit to come up with a solution that Belgium can agree to.

So far the EU has held off using the frozen capital directly but since last year has paid the "windfall profits" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is seen as less risky as Russia is under sanction and the returns are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to compensate for the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU options aimed at providing Ukraine with €90bn, to finance a majority of its funding needs.

• One is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the frozen Russian funds, which were originally held in bonds but have now mostly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and claims it is confident it has addressed them.

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

Should Euroclear face a financial hit 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.

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

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

Previously they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet Convinced

Brussels is insistent it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the repercussions if things fail.

A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to carry 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 is concerned about an additional danger of being vulnerable to extra legal costs.

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

"Banks need to follow capital and liquidity requirements and shouldn't put all their eggs in one basket. 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 secure. And if things go wrong it would be up to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad assurances for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

There is no time to lose, caution several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most financially feasible and practically possible solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be used, there are additional apprehensions among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to 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