Russia Responds at Europe's Plan to Loan Frozen Russian Funds to Kyiv

Kyiv remains depleting its financial resources to sustain its military and economy, after nearly four years of the ongoing invasion by Moscow.

In the view of European leaders, the answer to filling Ukraine's financial shortfall of €135.7bn for the following biennium rests with frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders aim to sign that off at their EU leaders' conference next week.

Russian officials warn the EU plan would be an act of theft, and Moscow's monetary authority stated on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Employ Russia's Funds, Say Ukraine and the EU

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

Brussels and Kyiv maintain that money should be used to restore what Russia has destroyed: The European Commission refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy valued at €90bn.

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

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

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

Authorities in Brussels is worried it will be left with an enormous bill if it all fails, and Euroclear CEO Valérie Urbain warns using the assets could "undermine the global financial architecture".

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

The leader of Belgium Bart de Wever has given Brussels a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

The Details of the EU's Proposal?

Brussels is working to the wire before next Thursday's summit to finalize a solution that Belgium can support.

So far the EU has avoided using the assets themselves directly but since last year has directed the "excess income" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the interest is considered less risky as Russia is under sanction and the proceeds are not property of the Russian state.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to cover the deficit left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are currently two EU proposals seeking to supplying Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• Option one is to borrow the funds on financial markets, guaranteed by the EU budget as a guarantee. This is Belgium's first choice but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the Russian assets, which were at first held in financial instruments but have now largely matured into cash. That capital is Euroclear property deposited at the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is assured it has dealt with them.

The proposal is for Belgium to be shielded with a insurance applying to all the €210bn of Russian assets in the EU.

Should 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 targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are expected to agree on Friday to immobilise Russia's central bank assets held in Europe permanently.

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

The EU ambassadors are planning to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Not Yet On Board

The Belgian government is adamant it remains a committed partner of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being left to handle the fallout if things go wrong.

A usually partisan political environment 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 about €565bn – think about if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium fears an added risk of being subject to extra legal costs.

Prof Colaert also argues the stipulation for Euroclear to provide a loan to the EU would breach EU banking regulations.

"Lenders need to adhere to capital and liquidity requirements 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 stable. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so important for Belgium to secure ironclad assurances for Euroclear."

Europe Under Pressure from Multiple Fronts

There is no time to lose, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible and practically possible solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be touched, there are additional apprehensions among leaders in Europe that the US may want to deploy Russia's frozen 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 holding discussions with Russia about possible partnership.

An initial document 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