Russia Hits Back at the EU's Scheme to Loan Immobilized Moscow's Cash to Kyiv

Ukraine is running out of financial resources to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in assets belonging to Russia that are frozen held by Belgian bank Euroclear, and EU leaders seek to give it the green light at their meeting in Brussels next week.

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

'Only Fair' to Employ Russia's Assets, Argue Ukraine and the EU

In total, Russia has about €210bn of its state reserves immobilized in the EU, and €185bn of that is held by Euroclear.

Brussels and Kyiv argue that that capital should be used to rebuild what Russia has destroyed: Brussels refers to it as a "loan for reparations" and has come up with a plan to support Ukraine's economy valued at €90bn.

"It's only fair that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that that capital then becomes Ukraine's," states Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to defend itself successfully against any future Russian attacks".

Russia's court action was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Authorities in Brussels is worried it will be left with an huge bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "disrupt the world's financial order".

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 reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Strategy?

European Union officials is working to the wire before next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has avoided accessing the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as permissible as Russia is sanctioned and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans designed to providing Ukraine with €90bn, to pay for a large portion of its funding needs.

• The first is to raise the money on capital markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be difficult when Hungary and Slovakia object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

The EU's executive accepts Belgium has justified fears and states it is convinced it has resolved them.

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

If Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

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

Until now they have had to vote all together every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and fears being forced to deal with the consequences if things do not work out.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is about €565bn – consider if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

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

Prof Colaert also believes the requirement for Euroclear to issue credit to the EU would violate EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be stable. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so important for Belgium to get water-tight guarantees for Euroclear."

The European Union Facing Strain from Multiple Fronts

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and politically achievable 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 succeed in a week's time".

Although Russia is unyielding its money should not be accessed, there are added concerns among leaders in Europe that the US may want to deploy Russia's frozen billions in another way, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been engaging with 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