Russia Hits Back at Europe's Plan to Lend Frozen Russian Cash to Kyiv

Ukraine is depleting its cash to sustain its military and economy, after almost four years of full-scale conflict with Russia.

From the EU's perspective, the solution to filling Kyiv's financial shortfall of €135.7bn for the next two years lies in assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels seek to give it the green light at their meeting in Brussels next week.

Russian officials warn the EU plan would be an act of theft, and Moscow's monetary authority declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Only Fair' to Use Moscow's Funds, Argue European and Ukrainian Officials

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

Brussels and Kyiv contend that money should be used to rebuild what Russia has devastated: The European Commission calls it a "loan for reparations" and has devised a plan to prop up Ukraine's economy amounting to €90bn.

"It is appropriate that the assets frozen from Russia should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself effectively against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is concerned.

Authorities in Brussels is concerned it will be burdened by an massive bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the world's financial order".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Strategy?

The EU is under pressure before next Thursday's summit to agree on a arrangement that Belgium can agree to.

So far the EU has held off using the frozen capital directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the profits is seen as less risky as Russia is subject to sanctions and the returns are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has had trouble trying to make up the shortfall resulting from the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to finance a large portion of its funding needs.

• The first is to secure the capital on financial markets, guaranteed by the EU budget as a collateral. This is Belgium's preferred option but it demands a unanimous vote by EU leaders and that would be challenging when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Moscow's immobilized capital, which were originally held in securities but have now mostly matured into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm acknowledges Belgium has valid worries and states it is confident it has dealt with them.

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

If Euroclear incur losses 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 targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, 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 ongoing 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 "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is adamant it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and fears being left to handle the repercussions if things do not work out.

A usually partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from European colleagues.

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

While the EU might be able to obtain enough assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra legal costs.

Prof Colaert also contends the demand for Euroclear to provide a loan to the EU would contravene 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 asking Euroclear to do precisely that.

"What is the purpose of 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 an additional reason why it's so vital for Belgium to secure water-tight protections for Euroclear."

Europe Facing Strain from Multiple Fronts

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

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do next. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be used, there are additional apprehensions among European figures that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has stated Ukraine is coordinating 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 initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving