Russia Responds at the EU's Proposal to Lend Frozen Moscow's Funds to Ukraine

Ukraine is running out of funding to maintain its military and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Ukraine's budget hole of €135.7bn for the coming 24 months rests with frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to give it the green light at their Brussels summit next week.

Moscow's representatives caution the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

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

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

European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has laid waste to: The European Commission refers to it as a "reparations loan" and has devised a plan to support Ukraine's economy valued at €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that money then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

Germany's leader Friedrich Merz argues the assets will "enable Ukraine to protect itself successfully against future Russian attacks".

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

The Belgian government is worried it will be saddled with an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has given Brussels a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

Brussels is working to the wire before next Thursday's summit to agree on a compromise that Belgium can accept.

So far the EU has avoided touching the assets themselves directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the profits is seen as less risky as Russia is sanctioned and the proceeds are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to compensate for the gap left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• Option one is to borrow the funds 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 challenging when Budapest and Bratislava oppose funding Ukraine's military.
• That leaves loaning Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now largely turned into cash. That capital is Euroclear property located within the European Central Bank.

The EU's executive accepts Belgium has legitimate concerns and claims it is convinced it has resolved them.

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

Should Euroclear face a financial hit 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 targeted Belgium itself, any decision by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

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

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Remains On Board

The Belgian government is adamant it remains a committed partner of Ukraine, but sees juridical dangers in the plan and worries about being shouldering the consequences if things fail.

A typically partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

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

While the EU might be able to secure enough assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra damages or penalties.

Prof Colaert also argues the requirement for Euroclear to grant a loan to the EU would contravene EU banking regulations.

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things fail it would be up to Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get absolute assurances for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most economically realistic and practically possible solution".

"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

Zelensky has indicated Ukraine is working with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about possible partnership.

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