Russia Responds at the EU's Scheme to Lend Frozen Moscow's Funds to Kyiv

Kyiv remains depleting its financial resources 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 financial shortfall of €135.7bn for the coming 24 months rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and European Union officials seek to finalize the plan at their EU leaders' conference next week.

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

'Appropriate' to Utilize Russia's Funds, Assert Kyiv and Brussels

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

European and Ukrainian authorities contend that that capital should be used to rebuild what Russia has laid waste to: EU officials refers to it as a "reparations loan" and has come up with a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that the assets frozen from Russia should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz states the assets will "allow Ukraine to shield itself successfully against future Russian attacks".

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

Authorities in Brussels is worried it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain warns using the assets could "disrupt the international financial system".

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

Belgium's PM Bart de Wever has given Brussels a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has refused to rule out legal action if it "presents significant risks" for his country.

What is the EU's Plan?

Brussels is racing against time prior to next Thursday's summit to come up with a solution that Belgium can accept.

So far the EU has refrained from using the principal funds directly but starting in 2024 has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the revenue is considered permissible as Russia is sanctioned and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• Option one is to raise the money on capital markets, backed by the EU budget as a surety. This is Belgium's preferred option but it needs a agreement by all by EU leaders and that would be problematic when two member states object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Moscow's immobilized capital, which were at first held in bonds but have now predominantly turned into cash. That money is Euroclear property located within the European Central Bank.

The EU's executive acknowledges Belgium has justified fears and claims it is convinced it has resolved them.

The scheme is for Belgium to be shielded with a insurance 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.

In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe indefinitely.

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

The EU ambassadors are planning to use an special provision 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.

The Reasons Belgium is Still Not Convinced

Belgium is firm it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being left to handle the repercussions if things go wrong.

A typically partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to shoulder a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient guarantees for the loan itself, Belgium worries about an further exposure of being subject to extra damages or penalties.

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

"Banks need to follow prudential rules and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"Why do we have these bank rules? It's because we want banks to be secure. And if things turn sour it would fall to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute protections for Euroclear."

The European Union In a Difficult Position from All Sides

There is no time to lose, warn a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the scheme involving immobilized capital is "the fiscally viable and politically realistic solution".

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

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

Zelensky has indicated Ukraine is coordinating with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about potential collaboration.

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