Russia Responds at Europe's Scheme to Lend Immobilized Russian Funds to Ukraine

Ukraine is facing a severe shortage of financial resources to keep going its armed forces and economy afloat, after almost four years of the ongoing invasion by Moscow.

From the EU's perspective, the answer to filling Ukraine's budget hole of €135.7bn for the following biennium lies in frozen Russian assets sitting in Belgian bank Euroclear, and Brussels hope to sign that off at their Brussels summit next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a conclusive plan is made.

'Only Fair' to Employ Russia's Assets, Argue European and Ukrainian Officials

In total, Russia has about €210bn of its assets frozen in the EU, and €185bn of that is in the custody of Euroclear.

European and Ukrainian authorities contend that money should be used to reconstruct what Russia has destroyed: The European Commission refers to it as a "loan for reparations" and has proposed a plan to prop up Ukraine's economy amounting to €90bn.

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

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

Russia's court action was expected in Brussels. But it is not just Moscow that is unhappy.

Authorities in Brussels is anxious it will be burdened by an massive bill if it all backfires, and Euroclear chief executive Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgium's PM Bart de Wever has given Brussels 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 "carries significant risks" for his country.

What is the EU's Plan?

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

Until now the EU has refrained from using the assets themselves directly but since last year has paid the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Legally, using the interest is considered safe as Russia is under sanction and the returns are not Moscow's sovereign assets.

But international military aid for Ukraine has declined sharply in 2025, and Europe has found it difficult to cover the deficit caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are currently two EU plans seeking to providing Ukraine with €90bn, to cover a majority of its budgetary necessities.

• Option one is to secure the capital on capital markets, guaranteed by the EU budget as a guarantee. This is Belgium's preferred option but it requires a agreement by all by EU leaders and that would be problematic when two member states are against funding Ukraine's military.
• That leaves loaning Ukraine cash from the Russian assets, which were at first held in bonds but have now largely been converted into cash. That funding is owned by Euroclear held in the European Central Bank.

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

The scheme is for Belgium to be protected with a assurance encompassing 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 settlement agency which are in the EU.

Should 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 expected to agree on Friday to immobilise 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 ongoing 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 financial well-being of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is firm it remains a strong supporter of Ukraine, but sees legal risks in the plan and is concerned about being left to handle the fallout if things fail.

A usually fractured political scene in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from European colleagues.

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

Although the EU might be able to secure sufficient guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra legal costs.

Prof Colaert also contends the demand for Euroclear to issue credit to the EU would violate EU banking regulations.

"Lenders need to comply with stability regulations and shouldn't concentrate risk. Now the EU is telling Euroclear to do exactly that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so crucial for Belgium to secure water-tight guarantees for Euroclear."

Europe Facing Strain from Every Direction

Time is of the essence, warn several EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a financially feasible and politically achievable solution".

"It's a matter of destiny for us," says 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".

Although Russia is insistent its money should not be used, there are further worries among leaders in Europe that the US may want to deploy Russia's blocked funds in another way, as part of its own peace plan.

Zelensky has said Ukraine is coordinating with Europe and the US on a rebuilding fund, but he is also aware the US has been engaging with Russia about possible partnership.

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