Russia Hits Back at the EU's Scheme to Loan Frozen Russian Assets to Ukraine

Ukraine is facing a severe shortage of cash to keep going its armed forces and economy afloat, after close to 48 months of Russia's full-scale war.

From the EU's perspective, the solution to addressing Ukraine's funding gap of €135.7bn for the following biennium rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and Brussels seek to finalize the plan at their Brussels summit next week.

Russian officials state the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Funds, Say Kyiv and Brussels

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

The EU and Ukraine argue that those funds should be used to rebuild what Russia has laid waste to: The European Commission calls it a "reconstruction loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

Chancellor Friedrich Merz argues the assets will "help Ukraine to defend itself efficiently against future Russian attacks".

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

The Belgian government is concerned it will be left with an massive bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "disrupt the global financial architecture".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

The EU is under pressure before next Thursday's summit to finalize a compromise that Belgium can support.

So far the EU has refrained from accessing the principal funds directly but since last year has directed 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 subject to sanctions and the returns are not Russian sovereign property.

But foreign defense assistance for Ukraine has fallen significantly in 2025, and Europe has struggled to cover the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at supplying Ukraine with €90bn, to finance a majority of its funding needs.

• Option one is to borrow the funds on financial markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be challenging when two member states are against funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the frozen Russian funds, which were initially held in securities but have now mostly been converted into cash. That money is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states 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 incur losses 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 recognized in the EU.

As an important step, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is insistent it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and fears being left to handle the fallout if things fail.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.

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

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

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

"Financial institutions need to follow stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these financial regulations? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to save Euroclear. That's an additional reason why it's so crucial for Belgium to obtain absolute protections for Euroclear."

EU Leaders Under Pressure from Every Direction

Time is of the essence, state several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "the most fiscally viable and politically achievable solution".

"It is a decisive moment 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 reach an agreement in a week's time".

While Russia is adamant its money should not be accessed, there are further worries among leaders in Europe that the US may want to employ Russia's immobilized billions for another purpose, as part of its own peace plan.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about future co-operation.

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