Russia Responds at Europe's Plan to Lend Frozen Moscow's Cash to Ukraine

Ukraine is facing a severe shortage of financial resources to keep going its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.

For Europe, the answer to filling Kyiv's financial shortfall of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and European Union officials hope to sign that off at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and Russia's central bank stated on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Appropriate' to Utilize Russia's Funds, Assert Ukraine and the EU

All told, Russia has roughly €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.

European and Ukrainian authorities contend that money should be used to restore what Russia has destroyed: EU officials refers to it as a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.

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

Germany's leader Friedrich Merz argues the assets will "help Ukraine to shield itself effectively against subsequent Russian attacks".

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

Belgium is concerned it will be saddled with an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will endorse the reconstruction loan scheme, and he has left open the possibility of legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

Brussels is under pressure before next Thursday's summit to finalize a compromise that Belgium can accept.

Until now the EU has avoided using the frozen capital directly but starting in 2024 has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is seen as less risky as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans aimed at providing Ukraine with €90bn, to cover a large portion of its financial requirements.

• One is to secure the capital on capital markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely matured into cash. That funding is an asset of Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has justified fears and claims it is confident it has dealt with them.

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

If Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.

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

In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe for the foreseeable future.

Previously they have had to vote by consensus every six months to extend the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Remains On Board

The Belgian government is firm it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and worries about being forced to deal with the fallout if things fail.

A typically fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium is a small economy. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain enough assurances for the loan itself, Belgium fears an additional danger of being vulnerable to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit 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 exactly that.

"Why do we have these banking laws? It's because we want banks to be secure. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain absolute assurances for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the fiscally viable and politically realistic solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do next. That's why we have to reach an agreement in a week's time".

While Russia is unyielding its money should not be accessed, there are further worries among leaders in Europe that the US may want to use Russia's frozen billions in another way, as part of its own diplomatic proposal.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also mindful the US has been engaging with Russia about potential collaboration.

An early draft of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving