Russia Responds at Europe's Proposal to Loan Frozen Russian Assets to Kyiv

Ukraine is facing a severe shortage of financial resources to keep going its armed forces and economy, after nearly four years of full-scale conflict with Russia.

In the view of European leaders, the remedy to addressing Kyiv's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and EU leaders hope to finalize the plan at their meeting in Brussels next week.

Authorities in Russia warn the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court even before a conclusive plan is made.

'Just' to Use Russia's Funds, Say European and Ukrainian Officials

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

European and Ukrainian authorities argue that money should be used to restore what Russia has laid waste to: EU officials terms it a "reconstruction loan" and has proposed a plan to prop up Ukraine's economy to the tune of €90bn.

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

Chancellor Friedrich Merz states the assets will "help Ukraine to shield itself effectively against future Russian attacks".

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

The Belgian government is concerned it will be saddled with an massive bill if it all fails, and Euroclear chief executive Valérie Urbain says using the assets could "disrupt 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 "pragmatic, fair, and legitimate conditions" before he will accept the reconstruction loan scheme, and he has not excluded legal action if it "presents significant risks" for his country.

What is the EU's Proposal?

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

Until now the EU has avoided using the principal funds directly but for the past year has directed the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is considered safe as Russia is under sanction and the earnings are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to cover the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options designed to supplying Ukraine with €90bn, to finance a large portion of its financial requirements.

• The first is to secure the capital on financial markets, secured against the EU budget as a collateral. This is Belgium's first choice but it requires a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is providing a loan of Ukraine cash from the Russian assets, which were initially held in financial instruments but have now predominantly matured into cash. That capital is owned by Euroclear deposited at the European Central Bank.

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

The proposal is for Belgium to be safeguarded with a assurance encompassing all the €210bn of Russian assets in the EU.

Should Euroclear suffer a loss 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.

If Russia took legal action against Belgium itself, any decision 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 for the foreseeable future.

Previously 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 expected to use an special provision 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 Satisfied

The Belgian government is firm it remains a staunch ally of Ukraine, but identifies juridical dangers in the plan and worries about being left to handle the repercussions if things do not work out.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is under pressure from other European officials.

"Belgium is a small economy. Belgian GDP is around €565bn – consider 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 assurances for the loan itself, Belgium fears an additional danger of being subject to extra legal costs.

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

"Lenders need to adhere to prudential rules and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things turn sour it would be up to Belgium to rescue Euroclear. That's another reason why it's so vital for Belgium to secure absolute guarantees for Euroclear."

Europe In a Difficult Position from All Sides

The situation is urgent, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "the most fiscally viable and politically achievable solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, 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 accessed, there are further worries among European figures that the US may want to employ Russia's frozen billions for another purpose, as part of its own peace initiative.

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

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