Russia Responds at the EU's Plan to Loan Immobilized Russian Funds to Ukraine

Kyiv remains facing a severe shortage of cash to maintain its armed forces and economy, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Kyiv's funding gap of €135.7bn for the following biennium rests with frozen Russian assets located within Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

Moscow's representatives state the EU plan would be an illegal seizure, and the Central Bank of Russia declared on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Only Fair' to Utilize Russia's Assets, Argue Ukraine and the EU

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

Brussels and Kyiv maintain that that capital should be used to restore what Russia has devastated: Brussels calls it a "reconstruction 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 rebuild what Russia has devastated – and that those funds then becomes ours," states Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself efficiently against subsequent Russian attacks".

Russia's court action was expected in Brussels. But it is not just Moscow that is unhappy.

Belgium is concerned it will be left with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

The EU is racing against time before next Thursday's summit to finalize a arrangement that Belgium can accept.

So far the EU has refrained from using the principal funds directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to furnishing Ukraine with €90bn, to finance a majority of its funding needs.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were initially held in securities but have now predominantly turned into cash. That money is owned by Euroclear deposited at the European Central Bank.

The EU's executive recognizes Belgium has justified fears and says it is assured it has resolved them.

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

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

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

In a key development, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote unanimously every six months to extend the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Still Not Convinced

Belgium is insistent it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and is concerned about being forced to deal with the fallout if things go wrong.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – imagine if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain enough protections for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

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

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things fail it would fall to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to secure absolute assurances for Euroclear."

EU Leaders In a Difficult Position from Every Direction

The situation is urgent, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most economically realistic and politically realistic 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 afterwards. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be accessed, there are further worries among EU officials that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving