Russia Responds at the EU's Proposal to Lend Frozen Russian Assets to Kyiv

Ukraine is running out of cash to sustain its military and economy, after almost four years of full-scale conflict with Russia.

For Europe, the remedy to addressing Kyiv's funding gap of €135.7bn for the coming 24 months lies in frozen Russian assets held by Belgian bank Euroclear, and Brussels aim to finalize the plan at their EU leaders' conference next week.

Authorities in Russia state 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 conclusive plan is made.

'Just' to Employ Moscow's Assets, Assert Ukraine and the EU

Overall, Russia has roughly €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

The EU and Ukraine contend that money should be used to rebuild what Russia has devastated: Brussels refers to it as a "reparations loan" and has devised a plan to bolster Ukraine's economy to the tune of €90bn.

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

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

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

Belgium is worried it will be burdened by an enormous bill if it all fails, and Euroclear head Valérie Urbain warns using the assets could "destabilise the international financial system".

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

The leader of Belgium Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will endorse the reparations plan, and he has not excluded legal action if it "carries significant risks" for his country.

The Details of the EU's Proposal?

European Union officials is working to the wire ahead of next Thursday's summit to come up with a solution that Belgium can agree to.

Previously the EU has avoided using the frozen capital directly but starting in 2024 has paid the "windfall profits" from them to Ukraine. In 2024 that totaled €3.7bn. From a legal standpoint, using the profits is seen as less risky as Russia is under sanction and the proceeds are not Moscow's sovereign assets.

But global military support for Ukraine has declined sharply in 2025, and Europe has struggled to make up the gap left by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options designed to furnishing Ukraine with €90bn, to finance a majority of its budgetary necessities.

• One is to raise the money on financial markets, backed by the EU budget as a guarantee. This is Belgium's first choice but it demands a unanimous vote by EU leaders and that would be challenging when Budapest and Bratislava are against funding Ukraine's military.
• The alternative is lending Ukraine cash from the frozen Russian funds, which were at first held in securities but have now mostly been converted into cash. That money is owned by Euroclear held in the European Central Bank.

The EU's executive recognizes Belgium has justified fears and claims it is convinced it has resolved them.

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

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

Should Russia went after Belgium itself, any ruling by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe permanently.

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 set to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the financial well-being of the union" continues.

Why Belgium is Still Not On Board

Brussels is firm it remains a staunch ally of Ukraine, but sees juridical dangers in the plan and worries about being forced to deal with the repercussions if things do not work out.

A typically divided political landscape 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 approximately €565bn – imagine 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 obtain adequate guarantees for the loan itself, Belgium is concerned about an additional danger of being subject to extra fines or liabilities.

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

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

"Why do we have these banking laws? It's because we want banks to be stable. And if things go wrong it would fall to Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to get water-tight guarantees for Euroclear."

The European Union Facing Strain from Every Direction

The situation is urgent, warn a group of EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the economically realistic and politically achievable 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 subsequently. That's why we have to finalize the deal in a week's time".

Although Russia is unyielding its money should not be touched, there are added concerns among European figures that the US may want to deploy Russia's blocked funds differently, as part of its own peace initiative.

Zelensky has indicated Ukraine is working with Europe and the US on a recovery fund, but he is also mindful the US has been talking to Russia about potential collaboration.

An early draft 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