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

Kyiv remains running out of funding to sustain its military and economy, after nearly four years of Russia's full-scale war.

From the EU's perspective, the remedy to addressing Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen sitting in Belgian bank Euroclear, and European Union officials seek to give it the green light at their Brussels summit next week.

Authorities in Russia state the EU plan would be an illegal seizure, and the Central Bank of Russia announced on Friday it was initiating legal action against Euroclear in a Moscow court prior to a final decision is made.

'Just' to Employ Russia's Funds, Say European and Ukrainian Officials

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

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

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

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

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

Belgium is anxious it will be left with an massive bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "destabilise the global financial architecture".

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

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted 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 Strategy?

Brussels is under pressure before next Thursday's summit to finalize a arrangement that Belgium can support.

Previously the EU has refrained from touching the principal funds directly but since last year has paid the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the revenue is considered safe as Russia is subject to sanctions and the returns are not Russian sovereign property.

But global military support for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to make up the gap resulting from 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 pay for a majority of its funding needs.

• The first is to raise the money on the markets, secured against the EU budget as a collateral. This is Belgium's first choice but it demands a agreement by all by EU leaders and that would be challenging when Hungary and Slovakia oppose funding Ukraine's military.
• That leaves lending Ukraine cash from the Russian assets, which were originally held in bonds but have now mostly turned into cash. That money is owned by Euroclear located within the European Central Bank.

The EU's executive recognizes Belgium has legitimate concerns and says it is confident it has dealt with them.

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

Should Euroclear face a financial hit of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia went after Belgium itself, any decision by a Russian court would not be enforced in the EU.

In a key development, EU ambassadors are set to approve on Friday to permanently block Russia's central bank assets held in Europe permanently.

Previously 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 expected to use an emergency clause under Article 122 of the EU Treaties so the assets stay blocked as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Remains Convinced

Belgium is insistent it remains a committed partner of Ukraine, but perceives juridical dangers in the plan and worries about being left to handle the consequences if things go wrong.

A normally partisan political environment in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from fellow EU leaders.

"Belgium has a modest-sized economy. Belgian GDP is approximately €565bn – consider if it would need to bear a €185bn bill," comments 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 vulnerable to extra damages or penalties.

Prof Colaert also argues the demand for Euroclear to issue credit to the EU would breach EU banking regulations.

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

"Why do we have these financial regulations? It's because we want banks to be stable. And if things fail it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so crucial for Belgium to get absolute protections for Euroclear."

Europe In a Difficult Position from Every Direction

There is no time to lose, state seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most financially feasible and politically achievable solution".

"This is a crucial test for us," says 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 succeed in a week's time".

While Russia is unyielding its money should not be used, there are additional apprehensions among European figures that the US may want to deploy Russia's frozen billions differently, as part of its own diplomatic proposal.

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

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