Russia Responds at the EU's Plan to Lend Immobilized Russian Funds to Kyiv

Ukraine is running out of financial resources to maintain its armed forces and economy afloat, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to plugging Kyiv's funding gap of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels aim to sign that off at their EU leaders' conference next week.

Russian officials caution the EU plan would be an confiscation, and Moscow's monetary authority announced on Friday it was suing Euroclear in a Moscow court prior to a definitive agreement is made.

'Only Fair' to Employ Moscow's Funds, Argue Ukraine and the EU

In total, Russia has approximately €210bn of its assets frozen in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to reconstruct what Russia has destroyed: EU officials terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy to the tune of €90bn.

"It's only fair that Moscow's blocked funds should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," remarks Ukrainian President Volodymyr Zelensky.

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

Moscow's lawsuit was anticipated in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is concerned it will be saddled with an huge bill if it all fails, and Euroclear head 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 set the EU a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "poses significant risks" for his country.

The Details of the EU's Proposal?

Brussels is racing against time before next Thursday's summit to come up with a compromise that Belgium can support.

So far the EU has avoided touching the assets themselves directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is considered safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying 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 designed to furnishing Ukraine with €90bn, to pay for a majority of its financial requirements.

• Option one is to raise the money on capital markets, guaranteed by the EU budget as a surety. This is Belgium's preferred option but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were at first held in securities but have now mostly matured into cash. That funding is Euroclear property held in the European Central Bank.

Brussels' executive arm recognizes Belgium has legitimate concerns and claims it is confident it has addressed them.

The plan is for Belgium to be shielded with a insurance covering all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

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

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

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

The EU ambassadors are expected 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 financial well-being of the union" continues.

Why Belgium is Not Yet Satisfied

Belgium is adamant it remains a committed partner of Ukraine, but identifies regulatory pitfalls in the plan and is concerned about being forced to deal with the consequences if things do not work out.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is around €565bn – consider if it would need to shoulder a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium is concerned about an further exposure of being vulnerable to extra damages or penalties.

Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would contravene 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 banking laws? It's because we want banks to be solvent. And if things go wrong it would fall to Belgium to bail out Euroclear. That's an additional reason why it's so crucial for Belgium to secure water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from Multiple Fronts

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most economically realistic and politically achievable solution".

"This is a crucial test for us," states 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 unyielding its money should not be used, there are further worries among European figures that the US may want to deploy Russia's blocked funds for another purpose, as part of its own peace initiative.

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

An early draft of the US peace plan mentioned $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving