Russia Responds at Europe's Plan to Loan Immobilized Russian Funds to Ukraine

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

From the EU's perspective, the answer to filling Kyiv's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets held by Belgian bank Euroclear, and European Union officials seek to give it the green light at their EU leaders' conference next week.

Russian officials caution the EU plan would be an confiscation, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Employ Russia's Assets, Assert European and Ukrainian Officials

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

Brussels and Kyiv argue that that capital should be used to restore what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

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

Chancellor Friedrich Merz argues the assets will "allow Ukraine to defend itself effectively against any future Russian attacks".

The legal move by Moscow was foreseen in Brussels. But it is not only Moscow that is unhappy.

Belgium is worried it will be burdened by an enormous bill if it all goes wrong, 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.

The leader of Belgium Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will agree to 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?

Brussels is racing against time prior to next Thursday's summit to agree on a solution that Belgium can support.

Previously the EU has refrained from using the principal funds directly but starting in 2024 has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the interest is seen as permissible as Russia is subject to sanctions and the earnings are not Moscow's sovereign assets.

But global military support for Ukraine has fallen significantly in 2025, and Europe has found it difficult to compensate for the gap caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options seeking to providing Ukraine with €90bn, to finance two-thirds of its financial requirements.

• 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 needs a unanimous vote by EU leaders and that would be difficult when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now mostly turned into cash. That funding is Euroclear property located within the European Central Bank.

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

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

If Euroclear incur losses of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced 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 for the foreseeable future.

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

The EU ambassadors are planning to use an extraordinary measure 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 Still Not Satisfied

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

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

"Belgium is a small economy. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," says Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

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

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Lenders need to follow prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be stable. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so crucial for Belgium to get absolute guarantees for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They argue the scheme involving immobilized capital is "a economically realistic and politically realistic solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is adamant its money should not be accessed, there are added concerns among leaders in Europe that the US may want to employ Russia's frozen billions differently, as part of its own peace initiative.

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

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