Russia Responds at the EU's Scheme to Lend Frozen Russian Cash to Kyiv

Kyiv remains facing a severe shortage of financial resources to maintain its military and economy afloat, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the solution to addressing Kyiv's funding gap of €135.7bn for the next two years rests with frozen Russian assets located within Belgian bank Euroclear, and EU leaders aim to give it the green light at their EU leaders' conference next week.

Moscow's representatives caution the EU plan would be an confiscation, and Russia's central bank announced on Friday it was suing Euroclear in a Moscow court ahead of a definitive agreement is made.

'Just' to Utilize Russia's Funds, Argue European and Ukrainian Officials

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

The EU and Ukraine contend that those funds should be used to restore what Russia has devastated: Brussels calls it a "reparations loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

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

German Chancellor Friedrich Merz states the assets will "enable Ukraine to defend itself efficiently against future Russian attacks".

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

Belgium is concerned it will be burdened by an massive bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "undermine the international financial system".

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

Belgium's PM Bart de Wever has presented the EU with a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is racing against time prior to next Thursday's summit to finalize a compromise that Belgium can accept.

Previously the EU has held off using the frozen capital directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the revenue is seen as permissible as Russia is subject to sanctions and the earnings are not property of the Russian state.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to make up the shortfall caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU plans designed to providing Ukraine with €90bn, to finance a large portion of its funding needs.

• Option one is to secure the capital on the markets, guaranteed by the EU budget as a guarantee. This is Belgium's favored solution but it demands a agreement by all by EU leaders and that would be problematic when Budapest and Bratislava object to funding Ukraine's military.
• The alternative is loaning Ukraine cash from the frozen Russian funds, which were at first held in securities but have now predominantly turned into cash. That funding is owned by Euroclear held in the European Central Bank.

The EU's executive accepts Belgium has justified fears and says it is assured it has addressed them.

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

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

In the event that Russia went after Belgium itself, any judgment by a Russian court would not be recognized in the EU.

In a significant move, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe permanently.

Until now they have had to vote by consensus every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.

Why Belgium is Not Yet Satisfied

The Belgian government is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being left to handle the fallout if things do not work out.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

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

Although the EU might be able to secure adequate protections for the loan itself, Belgium worries about an further exposure of being exposed to extra damages or penalties.

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

"Lenders need to adhere to stability regulations and shouldn't make one enormous loan. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these bank rules? It's because we want banks to be secure. And if things fail it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to get ironclad assurances for Euroclear."

Europe Under Pressure from All Sides

Time is of the essence, warn a group of EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and practically possible solution".

"It is a decisive moment 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 succeed in a week's time".

While Russia is insistent its money should not be accessed, there are added concerns among EU officials that the US may want to employ Russia's frozen billions differently, as part of its own diplomatic proposal.

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 possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving