Russia Hits Back at Europe's Plan to Loan Immobilized Moscow's Cash to Kyiv

Kyiv remains depleting its funding to sustain its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the answer to filling Kyiv's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Only Fair' to Employ Russia's Assets, Say European and Ukrainian Officials

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

European and Ukrainian authorities maintain that those funds should be used to reconstruct what Russia has laid waste to: The European Commission terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

Germany's leader Friedrich Merz states the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

The legal move by Moscow was expected in Brussels. But it is not only Moscow that is concerned.

The Belgian government is worried it will be saddled with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the international financial system".

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

The leader of Belgium Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

European Union officials is under pressure before next Thursday's summit to finalize a solution that Belgium can accept.

Previously the EU has avoided using the assets themselves directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the profits is deemed safe as Russia is subject to sanctions and the proceeds are not property of the Russian state.

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

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

• One is to borrow the funds on the markets, secured against the EU budget as a guarantee. This is Belgium's favored solution but it requires a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now predominantly turned into cash. That money is an asset of Euroclear deposited at the European Central Bank.

The European Commission accepts Belgium has legitimate concerns and claims it is confident it has addressed them.

The proposal is for Belgium to be protected with a guarantee applying to all the €210bn of Russian assets in the EU.

Should Euroclear face a financial hit of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

As an important step, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote unanimously every six months to renew 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 continue to be immobilized as long as an "clear risk to the financial well-being of the union" continues.

Why Belgium is Remains Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but perceives juridical dangers in the plan and worries about being forced to deal with the fallout if things do not work out.

A usually fractured political scene in this case has united behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about if it would need to bear a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to secure enough guarantees for the loan itself, Belgium is concerned about an further exposure of being subject to extra fines or liabilities.

Prof Colaert also argues the demand for Euroclear to provide a loan to the EU would violate EU banking regulations.

"Lenders 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.

"Why do we have 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 bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure absolute guarantees for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the most financially feasible and politically achievable solution".

"This is a crucial test for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 touched, there are further worries among leaders in Europe that the US may want to use Russia's blocked funds in another way, as part of its own peace initiative.

Zelensky has stated Ukraine is in discussions with Europe and the US on a rebuilding fund, but he is also mindful 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