Russia Retaliates at the EU's Plan to Lend Immobilized Russian Cash to Ukraine

Ukraine is depleting its cash to maintain its military and economy afloat, after nearly four years of Russia's full-scale war.

For Europe, the remedy to filling Ukraine's budget hole of €135.7bn for the next two years lies in Moscow's immobilized funds held by Belgian bank Euroclear, and European Union officials hope to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an act of theft, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Use Moscow's Funds, Say Kyiv and Brussels

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

European and Ukrainian authorities contend that money should be used to rebuild what Russia has laid waste to: The European Commission terms it a "reconstruction loan" and has proposed a plan to bolster Ukraine's economy valued at €90bn.

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

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

The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is unhappy.

The Belgian government is concerned it will be burdened by an massive bill if it all goes wrong, and Euroclear head Valérie Urbain argues using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted 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?

The EU is working to the wire prior to next Thursday's summit to come up with a compromise that Belgium can accept.

Until now the EU has held off using the frozen capital directly but for the past year has transferred the "windfall profits" from them to Ukraine. In 2024 that amounted to €3.7bn. From a legal standpoint, using the profits is considered less risky as Russia is sanctioned and the proceeds are not Moscow's sovereign assets.

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

There are currently two EU proposals seeking to furnishing Ukraine with €90bn, to pay for a majority of its funding needs.

• One is to borrow the funds on capital markets, guaranteed by the EU budget as a collateral. This is Belgium's favored solution but it needs a unanimous vote by EU leaders and that would be problematic when Budapest and Bratislava are against funding Ukraine's military.
• This makes the other option loaning Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly turned into cash. That funding is an asset of Euroclear deposited at the European Central Bank.

Brussels' executive arm accepts Belgium has legitimate concerns and states it is convinced it has resolved them.

The scheme is for Belgium to be safeguarded with a guarantee covering all the €210bn of Russian assets in the EU.

If Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia went after Belgium itself, any judgment 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 for the foreseeable future.

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

The EU ambassadors are set to use an extraordinary measure under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic security of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is insistent it remains a staunch ally of Ukraine, but sees regulatory pitfalls in the plan and fears being shouldering the consequences if things fail.

A normally fractured political scene in this case has united behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – think about if it would need to shoulder a €185bn bill," comments Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an additional danger of being subject to extra legal costs.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would breach EU banking regulations.

"Financial institutions need to comply with prudential rules and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things turn sour it would become the responsibility of Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to obtain absolute protections for Euroclear."

EU Leaders Under Pressure from Every Direction

The situation is urgent, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They maintain the proposal to use Russian funds is "a financially feasible and politically realistic solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, 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 unyielding its money should not be accessed, there are further worries among EU officials that the US may want to use Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has stated Ukraine is in discussions with Europe and the US on a recovery fund, but he is also cognizant the US has been engaging with Russia about potential collaboration.

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