Russia Hits Back at the EU's Proposal to Loan Frozen Russian Assets to Kyiv

Kyiv remains depleting its cash to sustain its military and economy afloat, after nearly four years of the ongoing invasion by Moscow.

From the EU's perspective, the solution to addressing Ukraine's budget hole of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels seek to sign that off at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Appropriate' to Use Moscow's Funds, Say European and Ukrainian Officials

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

The EU and Ukraine contend that that capital should be used to rebuild what Russia has destroyed: Brussels refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that the assets frozen from Russia should be used to rebuild what Russia has devastated – and that those funds then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

German Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not just Moscow that is concerned.

The Belgian government is worried it will be left with an huge bill if it all fails, and Euroclear chief executive Valérie Urbain argues using the assets could "undermine the world's financial order".

Euroclear also has an roughly €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 agree to the reparations plan, and he has left open the possibility of legal action if it "poses significant risks" for his country.

Explaining the EU's Proposal?

Brussels is under pressure before next Thursday's summit to come up with a arrangement that Belgium can support.

So far the EU has avoided accessing the principal funds directly but for the past year has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

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

• The first is to borrow the funds on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were at first held in financial instruments but have now predominantly matured into cash. That funding is Euroclear property held in the European Central Bank.

The EU's executive accepts Belgium has valid worries and claims it is convinced it has dealt with them.

The plan is for Belgium to be shielded with a guarantee 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.

Should Russia targeted Belgium itself, any ruling by a Russian court would not be accepted in the EU.

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

Until now they have had to vote all together 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 remain frozen as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is firm it remains a strong supporter of Ukraine, but sees juridical dangers in the plan and worries about being left to handle the repercussions if things fail.

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

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

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

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

"Lenders need to comply with prudential rules and shouldn't concentrate risk. Now the EU is instructing 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 fail it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to secure ironclad assurances for Euroclear."

Europe In a Difficult Position from All Sides

Time is of the essence, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and practically possible solution".

"This is a crucial test 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 reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are added concerns among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving