Russia Responds at the EU's Proposal to Lend Frozen Russian Funds to Ukraine

Kyiv remains running out of cash to maintain its armed forces and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the answer to filling Ukraine's financial shortfall of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials aim to give it the green light at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an act of theft, and the Central Bank of Russia declared on Friday it was taking to court Euroclear in a Moscow court prior to a definitive agreement is made.

'Appropriate' to Use Moscow's Assets, Assert Ukraine and the EU

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

European and Ukrainian authorities maintain that that capital should be used to rebuild what Russia has devastated: Brussels terms it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was expected in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is concerned it will be left with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified 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.

What is the EU's Strategy?

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

Until now the EU has held off using the frozen capital directly but since last year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is deemed permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to make up the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU options seeking to supplying Ukraine with €90bn, to pay for a majority of its funding needs.

• One is to secure the capital on the markets, backed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a unanimous vote by EU leaders and that would be problematic when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were originally held in securities but have now largely been converted into cash. That capital is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and states it is confident 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.

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered 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.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe indefinitely.

Previously they have had to vote unanimously every six months to continue the freeze, which could have meant a repeated 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 "clear risk to the economic interests of the union" continues.

Why Belgium is Still Not Convinced

Brussels is firm it remains a strong supporter of Ukraine, but identifies regulatory pitfalls in the plan and worries about being forced to deal with the consequences if things go wrong.

A normally divided political landscape in this case has united behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – think about if it would need to shoulder 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 fears an added risk of being subject to extra legal costs.

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

"Banks need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's an additional reason why it's so vital for Belgium to get water-tight assurances for Euroclear."

EU Leaders Facing Strain from All Sides

There is no time to lose, warn seven 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 fiscally viable and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

Although Russia is unyielding its money should not be used, there are added concerns among EU officials that the US may want to use Russia's immobilized billions differently, as part of its own diplomatic proposal.

Zelensky has stated 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 future co-operation.

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