Russia Hits Back at the EU's Scheme to Loan Immobilized Russian Assets to Kyiv

Kyiv remains running out of cash to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Kyiv's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders hope to sign that off at their meeting in Brussels next week.

Authorities in Russia state the EU plan would be an act of theft, and Russia's central bank declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Employ Russia's Funds, Say European and Ukrainian Officials

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

European and Ukrainian authorities contend that those funds should be used to rebuild what Russia has devastated: EU officials terms it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to shield itself efficiently against future Russian attacks".

Moscow's lawsuit was expected in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is anxious it will be saddled with an massive bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the international financial system".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

The EU is under pressure prior to next Thursday's summit to finalize a arrangement that Belgium can support.

Previously the EU has avoided using the principal funds directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is deemed safe as Russia is under sanction and the proceeds are not property of the Russian state.

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

There are currently two EU proposals designed to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• The first is to secure the capital on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly matured into cash. That capital is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is assured it has dealt with them.

The proposal is for Belgium to be safeguarded with a assurance encompassing all the €210bn of Russian assets in the EU.

If Euroclear face a financial hit of its own assets in Russia, that would be offset 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 decision by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

The Reasons Belgium is Still Not Convinced

Brussels is firm it remains a strong supporter of Ukraine, but perceives juridical dangers in the plan and fears being shouldering the repercussions if things go wrong.

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

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure enough assurances for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

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

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

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure water-tight protections for Euroclear."

EU Leaders Facing Strain from Multiple Fronts

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most economically realistic and politically realistic solution".

"It is a decisive moment for us," states leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also mindful the US has been holding discussions with Russia about potential collaboration.

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