Russia Responds at the EU's Plan to Loan Immobilized Russian Funds to Kyiv

Kyiv remains facing a severe shortage of funding to sustain its armed forces and economy, after close to 48 months of full-scale conflict with Russia.

In the view of European leaders, the answer to filling Kyiv's funding gap of €135.7bn for the following biennium rests with Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.

Moscow's representatives caution the EU plan would be an illegal seizure, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court ahead of a conclusive plan is made.

'Just' to Use Russia's Funds, Assert Ukraine and the EU

Overall, Russia has approximately €210bn of its assets blocked in the EU, and €185bn of that is in the custody of Euroclear.

The EU and Ukraine argue that those funds should be used to rebuild what Russia has devastated: Brussels terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy amounting to €90bn.

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

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

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

Belgium 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 "undermine the world's financial order".

Euroclear also has an estimated €16-17bn locked 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 not excluded legal action if it "presents significant risks" for his country.

The Details of the EU's Plan?

European Union officials is racing against time prior to next Thursday's summit to agree on a arrangement that Belgium can accept.

Previously the EU has held off accessing the assets themselves directly but for the past year has paid the "excess income" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the interest is seen as permissible as Russia is subject to sanctions and the earnings are not Russian sovereign property.

But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the deficit caused by the US decision to largely cease funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to raise the money on the markets, backed by the EU budget as a guarantee. This is Belgium's preferred option but it needs a agreement by all 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 Russian assets, which were originally held in securities but have now mostly been converted into cash. That funding is an asset of Euroclear located within the European Central Bank.

The European Commission recognizes Belgium has justified fears and claims it is convinced it has addressed them.

The scheme is for Belgium to be protected 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 loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.

Should Russia targeted 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 permanently block Russia's central bank assets held in Europe indefinitely.

Until now they have had to vote unanimously every six months to continue the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

Why Belgium is Remains Convinced

Belgium is firm it remains a staunch ally of Ukraine, but sees legal risks in the plan and fears being left to handle the fallout if things do not work out.

A normally partisan political environment 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 around €565bn – consider if it would need to shoulder a €185bn bill," says Veerle Colaert, expert in financial law at KU Leuven University.

Although the EU might be able to arrange enough protections for the loan itself, Belgium worries about an further exposure of being subject to extra legal costs.

Prof Colaert also believes the demand for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't put all their eggs in one basket. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these financial regulations? It's because we want banks to be stable. And if things fail it would fall to Belgium to bail out Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute assurances for Euroclear."

The European Union Under Pressure from Multiple Fronts

There is no time to lose, state seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They believe the proposal to use Russian funds is "a economically realistic 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 subsequently. That's why we have to finalize the deal in a week's time".

While Russia is insistent its money should not be accessed, there are additional apprehensions among EU officials that the US may want to deploy Russia's frozen billions for another purpose, as part of its own peace initiative.

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

An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving