Russia Retaliates at the EU's Plan to Loan Frozen Russian Cash to Kyiv

Kyiv remains facing a severe shortage of funding to keep going its military and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Ukraine's budget hole of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an illegal seizure, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Use Moscow's Funds, Assert European and Ukrainian Officials

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

Brussels and Kyiv argue that money should be used to rebuild what Russia has laid waste to: The European Commission terms it a "reparations 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 reconstruct what Russia has destroyed – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against any 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 enormous bill if it all backfires, and Euroclear CEO Valérie Urbain says using the assets could "undermine the world's financial order".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has not excluded legal action if it "poses significant risks" for his country.

What is the EU's Strategy?

European Union officials is under pressure before next Thursday's summit to agree on a arrangement that Belgium can agree to.

Until now the EU has refrained from accessing the assets themselves directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the interest is seen as less risky as Russia is sanctioned and the proceeds are not Russian sovereign property.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has struggled to cover the gap resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at providing Ukraine with €90bn, to pay for a majority of its funding needs.

• One is to raise the money on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a consensus by EU leaders and that would be difficult when two member states object to funding Ukraine's military.
• This makes the other option providing a loan of Ukraine cash from the Russian assets, which were originally held in financial instruments but have now mostly matured into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

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

The scheme is for Belgium to be shielded with a assurance applying to all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss 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.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic security of the union" continues.

Why Belgium is Still Not Satisfied

The Belgian government is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being shouldering the consequences if things do not work out.

A usually partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – imagine if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

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

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

"Financial institutions need to comply with capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to bail out Euroclear. That's another reason why it's so crucial for Belgium to get ironclad guarantees for Euroclear."

The European Union Under Pressure from Multiple Fronts

The situation is urgent, state a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "a economically realistic and politically achievable solution".

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

While Russia is insistent its money should not be used, there are added concerns among leaders in Europe that the US may want to employ Russia's blocked funds in another way, as part of its own diplomatic proposal.

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

A preliminary version 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