Russia Responds at the EU's Proposal to Loan Frozen Russian Cash to Kyiv

Kyiv remains facing a severe shortage of cash to keep going its military and economy afloat, after almost four years of Russia's full-scale war.

In the view of European leaders, the answer to addressing Ukraine's financial shortfall of €135.7bn for the next two years rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials hope to sign that off at their EU leaders' conference next week.

Authorities in Russia warn the EU plan would be an act of theft, and the Central Bank of Russia stated on Friday it was suing Euroclear in a Moscow court prior to a final decision is made.

'Just' to Utilize Russia's Funds, Argue Ukraine and the EU

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

European and Ukrainian authorities contend that those funds should be used to reconstruct what Russia has destroyed: Brussels terms it a "reparations loan" and has come up with a plan to bolster Ukraine's economy amounting to €90bn.

"It's only fair that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to protect itself effectively against future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is unhappy.

Authorities in Brussels is anxious it will be burdened by an enormous bill if it all backfires, and Euroclear chief executive Valérie Urbain says using the assets could "undermine the world's financial order".

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

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

Explaining the EU's Plan?

The EU is under pressure prior to next Thursday's summit to agree on a arrangement that Belgium can agree to.

Previously the EU has refrained from accessing the frozen capital directly but starting in 2024 has paid the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. From a legal standpoint, using the revenue is seen as less risky 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 had trouble trying to compensate for the gap left by the US decision to all but stop funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at providing Ukraine with €90bn, to pay for a large portion of its financial requirements.

• The first is to borrow the funds on the markets, guaranteed by the EU budget as a surety. This is Belgium's favored solution but it needs a agreement by all by EU leaders and that would be challenging when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is lending Ukraine cash from the Russian assets, which were initially held in bonds but have now mostly matured into cash. That funding is Euroclear property located within the European Central Bank.

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

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

If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered 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 accepted in the EU.

In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote unanimously every six months to renew the freeze, which could have meant a ongoing risk to Belgium.

The EU ambassadors are planning 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 security of the union" continues.

Why Belgium is Not Yet Convinced

Brussels is insistent it remains a strong supporter of Ukraine, but identifies legal risks in the plan and fears being shouldering the repercussions if things fail.

A typically divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, expert in financial law at KU Leuven University.

While the EU might be able to obtain sufficient assurances for the loan itself, Belgium worries about an further exposure of being vulnerable to extra fines or liabilities.

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

"Banks need to follow stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"What is the purpose of these bank rules? It's because we want banks to be stable. And if things turn sour it would be up to Belgium to save Euroclear. That's an additional reason why it's so important for Belgium to obtain absolute assurances for Euroclear."

The European Union In a Difficult Position from All Sides

The situation is urgent, state 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 "the fiscally viable and practically possible solution".

"It's a matter of destiny for us," warns leading German conservative MP Norbert Röttgen. "If we fail, I don't know what we'll do subsequently. That's why we have to reach an agreement in a week's time".

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

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

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