Russia Retaliates at Europe's Proposal to Loan Immobilized Russian Cash to Ukraine

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

In the view of European leaders, the solution to filling Ukraine's budget hole of €135.7bn for the coming 24 months is found in assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and EU leaders aim to give it the green light at their Brussels summit next week.

Russian officials caution the EU plan would be an confiscation, and Russia's central bank stated on Friday it was initiating legal action against Euroclear in a Moscow court even before a final decision is made.

'Appropriate' to Employ Russia's Funds, Assert Ukraine and the EU

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

European and Ukrainian authorities argue that that capital should be used to rebuild what Russia has laid waste to: Brussels calls it a "reparations loan" and has proposed a plan to bolster Ukraine's economy to the tune of €90bn.

"It is only just that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," remarks Ukraine's Volodymyr Zelensky.

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

Moscow's lawsuit was foreseen in Brussels. But it is not just Moscow that is dissatisfied.

Belgium is concerned it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".

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

Belgian Prime Minister Bart de Wever has presented the EU with a series of "pragmatic, fair, and legitimate conditions" before he will agree to the reparations plan, and he has refused to rule out legal action if it "poses significant risks" for his country.

What is the EU's Plan?

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

Previously the EU has avoided accessing the frozen capital directly but for the past year has transferred the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Juridically, using the profits is seen as safe as Russia is sanctioned and the earnings are not Russian sovereign property.

But global military support for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the deficit left by the US decision to largely cease funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at supplying Ukraine with €90bn, to cover two-thirds of its funding needs.

• Option one is to secure the capital on financial markets, backed by the EU budget as a surety. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be problematic when two member states oppose funding Ukraine's military.
• That leaves providing a loan of Ukraine cash from the Russian assets, which were at first held in bonds but have now mostly been converted into cash. That capital is an asset of Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and states it is assured it has addressed them.

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

If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia took legal action against Belgium itself, any judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are set to approve on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

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 extraordinary measure under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.

Why Belgium is Not Yet Convinced

Belgium is adamant it remains a staunch ally of Ukraine, but identifies regulatory pitfalls in the plan and fears being forced to deal with the consequences if things do not work out.

A typically divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is facing pressure from fellow EU leaders.

"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to arrange sufficient protections for the loan itself, Belgium fears an added risk of being subject to extra fines or liabilities.

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

"Banks need to comply with capital and liquidity requirements and shouldn't put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to bail out Euroclear. That's a further cause why it's so important for Belgium to secure absolute guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

Time is of the essence, state several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the financially feasible and practically possible solution".

"It is a decisive moment for us," warns leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".

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

Zelensky has stated Ukraine is coordinating with Europe and the US on a rebuilding 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