Russia Responds at the EU's Proposal to Loan Frozen Russian Funds to Ukraine

Kyiv remains running out of financial resources to maintain its military and economy afloat, after almost four years of the ongoing invasion by Moscow.

In the view of European leaders, the remedy to filling Ukraine's funding gap of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and European Union officials aim to sign that off at their meeting in Brussels next week.

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

'Appropriate' to Utilize Moscow's Funds, Say Kyiv and Brussels

In total, Russia has about €210bn of its funds frozen in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that money should be used to restore what Russia has laid waste to: Brussels terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that that capital then becomes ours," says Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "help Ukraine to protect itself successfully against any future Russian attacks".

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

Belgium is concerned it will be saddled with an huge bill if it all backfires, and Euroclear chief executive Valérie Urbain warns 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 given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "poses 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 support.

Previously the EU has refrained from using the frozen capital directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the profits is considered permissible as Russia is under sanction and the proceeds are not Russian sovereign property.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at supplying Ukraine with €90bn, to pay for two-thirds of its budgetary necessities.

• The first is to secure the capital 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 problematic when Budapest and Bratislava are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in financial instruments but have now largely matured into cash. That money is owned by Euroclear held in the European Central Bank.

Brussels' executive arm recognizes Belgium has valid worries and claims it is assured it has dealt with them.

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

Should Euroclear suffer a loss 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.

If Russia went after 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 freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore 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 stay blocked as long as an "direct danger to the economic security of the union" continues.

Why Belgium is Not Yet Satisfied

Brussels is insistent it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and fears being forced to deal with the fallout if things fail.

A normally 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 around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium is concerned about an additional danger of being exposed to extra fines or liabilities.

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

"Lenders need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be solvent. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get water-tight assurances for Euroclear."

EU Leaders In a Difficult Position from All Sides

The situation is urgent, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most economically realistic and practically possible 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 finalize the deal in a week's time".

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

Zelensky has said Ukraine is in discussions with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about future co-operation.

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