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

Kyiv remains running out of financial resources to keep going its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to addressing Kyiv's financial shortfall of €135.7bn for the coming 24 months lies in Moscow's immobilized funds held by Belgian bank Euroclear, and Brussels hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

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

Overall, Russia has approximately €210bn of its state reserves frozen in the EU, and €185bn of that is managed by Euroclear.

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

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," remarks Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz argues the assets will "allow Ukraine to protect itself effectively against subsequent Russian attacks".

Russia's court action was anticipated in Brussels. But it is not only Moscow that is concerned.

The Belgian government is concerned it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain argues using the assets could "undermine the global financial architecture".

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

Belgium's PM 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.

What is the EU's Plan?

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

Until now the EU has held off touching the principal funds directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the revenue is deemed safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

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

There are currently two EU options seeking to furnishing Ukraine with €90bn, to pay for a majority of its budgetary necessities.

• The first is to raise the money on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were initially held in bonds but have now largely matured into cash. That funding is owned by Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has justified fears and says it is confident it has resolved them.

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

Should Euroclear incur losses 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 judgment 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.

Until now they have had to vote by consensus every six months to continue 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 interests of the union" continues.

Why Belgium is Not Yet Convinced

The Belgian government is adamant it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and is concerned about being left to handle the repercussions if things fail.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

Although the EU might be able to arrange adequate protections for the loan itself, Belgium worries about an additional danger of being exposed to extra fines or liabilities.

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

"Lenders need to adhere to capital and liquidity requirements and shouldn't put all their eggs in one basket. 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 secure. And if things fail it would fall to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute assurances for Euroclear."

Europe Under Pressure from All Sides

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the most fiscally viable and politically realistic 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 finalize the deal in a week's time".

While Russia is adamant its money should not be touched, there are further worries among European figures that the US may want to employ Russia's blocked funds differently, as part of its own diplomatic proposal.

Zelensky has said Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been holding discussions with Russia about possible partnership.

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