Russia Hits Back at the EU's Plan to Lend Frozen Russian Funds to Kyiv

Kyiv remains depleting its funding to keep going its armed forces and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Appropriate' to Use Russia's Funds, Argue Kyiv and Brussels

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

Brussels and Kyiv maintain that those funds should be used to rebuild what Russia has laid waste to: The European Commission calls it a "reparations loan" 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 rebuild what Russia has destroyed – and that that capital then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

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

The Belgian government is concerned it will be burdened by an massive bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

Explaining the EU's Plan?

Brussels is working to the wire before next Thursday's summit to come up with a compromise that Belgium can agree to.

Until now the EU has avoided touching the principal funds directly but for the past year has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is considered safe as Russia is under sanction and the proceeds are not Russian sovereign property.

But global military support for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to supplying Ukraine with €90bn, to pay for a large portion of its budgetary necessities.

• Option one is to borrow the funds on financial markets, secured against the EU budget as a collateral. This is Belgium's preferred option but it demands a consensus by EU leaders and that would be challenging when Hungary and Slovakia object to funding Ukraine's military.
• That leaves lending Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now largely turned into cash. That capital is owned by Euroclear deposited at the European Central Bank.

The European Commission recognizes Belgium has valid worries and states it is confident it has dealt with them.

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

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

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

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

Until now they have had to vote by consensus every six months to continue 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 stay blocked as long as an "immediate threat to the economic interests of the union" continues.

The Reasons Belgium is Still Not On Board

Brussels is firm it remains a committed partner of Ukraine, but identifies legal risks in the plan and is concerned about being shouldering the repercussions if things go wrong.

A usually partisan political environment in this case has united behind 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 bear a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to secure sufficient guarantees for the loan itself, Belgium is concerned about an added risk of being exposed to extra fines or liabilities.

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

"Financial institutions need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these bank rules? It's because we want banks to be solvent. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get water-tight guarantees for Euroclear."

Europe Under Pressure from All Sides

The situation is urgent, warn seven EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the frozen assets plan is "the most fiscally viable and politically realistic solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If we fail, 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 used, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions differently, as part of its own peace initiative.

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

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