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

Ukraine is depleting its cash to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the next two years is found in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials aim to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an confiscation, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

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

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

The EU and Ukraine contend that that capital should be used to reconstruct what Russia has devastated: Brussels terms it a "reparations loan" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

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

Belgium is concerned it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

European Union officials is working to the wire ahead of next Thursday's summit to finalize a compromise that Belgium can agree to.

Until now the EU has avoided using the assets themselves directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is seen as safe as Russia is sanctioned and the earnings are not property of the Russian state.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU options seeking to supplying Ukraine with €90bn, to cover a large portion of its funding needs.

• One is to borrow the funds on financial markets, secured against the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were originally held in securities but have now largely matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is confident it has dealt with them.

The scheme is for Belgium to be safeguarded with a guarantee applying to 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 clearing house which are in the EU.

In the event that 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 set to approve on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Until now they have had to vote all together every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are expected to use an emergency clause 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 On Board

The Belgian government is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and fears being shouldering the repercussions if things go wrong.

A normally partisan political environment in this case has united behind Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough assurances for the loan itself, Belgium worries about an additional danger of being exposed to extra fines or liabilities.

Prof Colaert also argues the stipulation 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 precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so vital for Belgium to get ironclad assurances for Euroclear."

The European Union In a Difficult Position from Multiple Fronts

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the financially feasible 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 finalize the deal in a week's time".

While Russia is unyielding its money should not be touched, there are additional apprehensions among EU officials that the US may want to use Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has stated Ukraine is coordinating with Europe and the US on a reconstruction fund, but he is also cognizant the US has been talking to Russia about possible partnership.

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