Russia Hits Back at Europe's Scheme to Lend Immobilized Russian Cash to Ukraine

Ukraine is running out of cash to sustain its military and economy afloat, after close to 48 months of full-scale conflict with Russia.

From the EU's perspective, the remedy to plugging Ukraine's funding gap of €135.7bn for the next two years lies in frozen Russian assets located within Belgian bank Euroclear, and Brussels aim to sign that off at their EU leaders' conference next week.

Authorities in Russia caution the EU plan would be an confiscation, and Moscow's monetary authority declared on Friday it was suing Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Utilize Russia's Funds, Argue Kyiv and Brussels

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

European and Ukrainian authorities maintain that that capital should be used to reconstruct what Russia has laid waste to: The European Commission terms it a "reconstruction loan" and has devised a plan to support Ukraine's economy amounting to €90bn.

"It's only fair that the assets frozen from Russia should be used to rebuild what Russia has destroyed – and that that capital then becomes ours," says Ukraine's Volodymyr Zelensky.

Chancellor Friedrich Merz states the assets will "enable Ukraine to shield itself successfully against subsequent Russian attacks".

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

The Belgian government is worried it will be saddled with an huge bill if it all fails, and Euroclear CEO Valérie Urbain says using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

Explaining the EU's Strategy?

The EU is working to the wire prior to next Thursday's summit to finalize a solution that Belgium can support.

Until now the EU has refrained from using the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Legally, using the revenue is considered safe as Russia is subject to sanctions and the earnings are not property of the Russian state.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the shortfall left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are presently two EU proposals aimed at furnishing Ukraine with €90bn, to cover two-thirds of its budgetary necessities.

• One is to raise the money on capital markets, backed by the EU budget as a collateral. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
• That leaves lending Ukraine cash from the frozen Russian funds, which were originally held in securities but have now mostly been converted into cash. That money is Euroclear property deposited at the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is convinced it has addressed them.

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

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

As an important step, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe permanently.

Heretofore they have had to vote by consensus every six months to extend the freeze, which could have meant a repeated 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 financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is firm it remains a committed partner of Ukraine, but sees juridical dangers in the plan and is concerned about being shouldering the fallout if things fail.

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

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – think about if it would need to bear a €185bn bill," comments Veerle Colaert, academic specializing in financial regulation at KU Leuven University.

Although the EU might be able to secure enough guarantees for the loan itself, Belgium fears an further exposure of being vulnerable to extra fines or liabilities.

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

"Financial institutions need to adhere to prudential rules and shouldn't make one enormous loan. Now the EU is telling Euroclear to do just that.

"What is the purpose of these banking laws? It's because we want banks to be secure. And if things go wrong it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to obtain water-tight guarantees for Euroclear."

EU Leaders Facing Strain from All Sides

Time is of the essence, state several EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the scheme involving immobilized capital is "the most economically realistic and politically achievable 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 succeed in a week's time".

While Russia is adamant its money should not be accessed, there are added concerns among European figures that the US may want to deploy Russia's immobilized billions for another purpose, as part of its own peace initiative.

Zelensky has said Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about possible partnership.

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