Russia Hits Back at the EU's Proposal to Loan Immobilized Russian Cash to Kyiv

Ukraine is depleting its cash to keep going its military and economy, after nearly four years of Russia's full-scale war.

In the view of European leaders, the answer to filling Ukraine's budget hole of €135.7bn for the next two years is found in Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels hope to sign that off at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court ahead of a definitive agreement is made.

'Only Fair' to Employ Moscow's Assets, Assert European and Ukrainian Officials

In total, Russia has about €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities argue that those funds should be used to rebuild what Russia has destroyed: The European Commission calls it a "loan for reparations" and has devised a plan to bolster Ukraine's economy valued at €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that money then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is concerned.

The Belgian government is concerned it will be burdened by an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "disrupt the global financial architecture".

Euroclear also has an approximate €16-17bn immobilised in Russia.

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

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

Previously the EU has held off using the principal funds directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is considered safe as Russia is sanctioned and the returns are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU plans designed to supplying Ukraine with €90bn, to pay for two-thirds of its financial requirements.

• Option one is to secure the capital on the markets, secured against the EU budget as a surety. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were at first held in financial instruments but have now mostly matured into cash. That funding 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 safeguarded with a assurance covering all the €210bn of Russian assets in the EU.

If Euroclear incur losses 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.

If Russia targeted Belgium itself, any judgment by a Russian court would not be recognized in the EU.

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

Previously 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 set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

The Reasons Belgium is Not Yet On Board

Belgium is adamant it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange adequate protections for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

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

"Lenders need to comply with stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be stable. And if things fail it would be up to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to secure ironclad protections for Euroclear."

The European Union Under Pressure from Every Direction

The situation is urgent, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a financially feasible and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do subsequently. 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 European figures that the US may want to employ Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding 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 immobilized capital being used by the US for reconstruction, with the US {taking|receiving